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Puerto Rico Form 480.6C for Dividends and Taxes withheld within an IRA

  I have a Traditional IRA account with investments in numerous stocks and REITs.  One of the REITs apparently had some holdings in Puerto Rico, and after I filed my 2019 taxes, I received a Puerto Rico Form 480.6C with entries in line 6 for "Dividends Subject to 15% under Section 1062.08".

  As I understand it, since there are no distributions from this IRA, and there was no 1041K which may have indicated "Unrelated Business Income" requiring a Form 990-T; does this Form have ANY impact on my tax return?  Can I file a Form 1116 to get Foreign Tax Credit even though the Tax was paid within an IRA--or does it just get counted as an expense out of the IRA that is non-taxable (or deductible) and nothing is done with it?

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Puerto Rico Form 480.6C for Dividends and Taxes withheld within an IRA

Dividends earned in traditional IRAs are not taxed when they are paid or reinvested, rather retirement account withdrawals are taxed at one's current income tax rate when they are withdrawn.  This includes foreign investments.

 

I do not believe a 990-T would be required, and it would not affect your taxes.

 

Because all  the investments are housed in the IRA, you will not be able to recover the foreign tax credit.

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Expert Alumni

Puerto Rico Form 480.6C for Dividends and Taxes withheld within an IRA

Dividends earned in traditional IRAs are not taxed when they are paid or reinvested, rather retirement account withdrawals are taxed at one's current income tax rate when they are withdrawn.  This includes foreign investments.

 

I do not believe a 990-T would be required, and it would not affect your taxes.

 

Because all  the investments are housed in the IRA, you will not be able to recover the foreign tax credit.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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