Vanguard Foreign Source Income

[Navillus]

Box 7 on my Vanguard 1099 DIV shows a foreign tax paid amount of $341.84. TT is asking me for the amount of my dividend income was from foreign countries. There's nothing on the Vanguard form showing this amount. Vanguard does supply percentages of foreign income by fund but with multiple funds that would be very difficult. I've paid foreign tax for years and never been asked this question. What am I doing wrong?   

[AnnetteB6]

There is nothing you are doing wrong with the inputs required to claim the foreign tax credit using Form 1116.  The question about the amount of foreign dividends is not new for 2021.

You will need to make your best effort to determine what portion of the total dividends reported are sourced from foreign countries and enter that amount.  Take a closer look at the details reported to you on your consolidated 1099 from Vanguard.  The foreign dividends may be broken out somewhere on your form.  

[Navillus]

Thank you for the response. The only breakout I see on the 1099 are qualified and non qualified dividends. Might the non qualified dividends be the ones from foreign sources?

[AnnetteB6 · Accepted solution]

Not necessarily.  Qualified dividends and non-qualified dividends are separated from one another because they are taxed differently.  

In order to be considered qualified dividends, they must:

• Be paid by an American company or a qualifying foreign company
• Be paid between January 1, 2021 and December 31, 2021
• Meet the holding period requirement for the stock—the holding period is at least 61 days during the 121-day period that begins 60 days before the ex-dividend date (the day after a company announces its dividend payments to shareholders)

Non-qualified dividends do not meet those qualifications.

You could check your final year-end statement to see if any breakout information was shown there or possibly contact your broker at Vanguard if you work with someone directly who may be able to help.

@Navillus

[Topangamama]

I also have foreign source income from Vanguard, but my 1099 Supplemental Information sheet does list "Fgn Source Inc Tot" percentages and "Fgn Source Inc Qual" percentages for each international fund.  When TT asks how much of my total Vanguard income was from foreign countries, do I use the Foreign Source Income Total percentage or Fgn Source Inc Qual percentage to calculate the amount?  

[FangxiaL]

You should use the total percentage to figure out the total foreign source income received.

@Topangamama

[richardk19]

@AnnetteB6 

Should I multiply my "Total ordinary dividends (Box 1a)" from my 1099-DIV by the "Column 2: Qualified foreign dividend income" from the 2021 Foreign tax credit information for eligible Vanguard funds publication to find my qualified foreign dividends for each Vanguard fund (International Explorer, etc.)?

And I would choose the "These foreign dividends are from a mutual fund/RIC" option and not "from another source" on Turbotax after I enter the amount of the foreign dividends?

Thank you!