When we add SCH 1 for other income/additional income - can we add/enter a statement to explain what that other income is about? - Premier desktop version

[seccam]

Question for premier desktop version 

I also want to know for premier desktop version - when we add a SCH 1 for add other income(additional income and adjustment to income) 

can we add a statement to explain what that other income is ?

I am asking because a relative has foreign capital gains and foreign interest income where they don't give required 1099 forms either B or INT or DIV - so last year she declared as other income and give explanation as foreign capital gains ..and foreign interest income etc and it was accepted by IRS.

She wanted to add that income as regular capital gains or interest/dividend but she could not because like I said it was foreign broker/bank ..they dont issue 1099 forms so basically they neither report to IRS or even give 1099 forms so there was no way to validate if she reported as regular capital gains or interest. @fanfare @Critter-3 @PatriciaV 

[Mike9241]

there is no way to attach a manual statement if she wants to e-file. 

even including it in a mailed return can result in it being ignored since it is not official. 

1099s are not needed for foreign interest or capital gains

when she comes to the interest income section all she needs to enter is the payor's name and the amount converted to US dollars and if she paid foreign taxes on that the foreign tax info

when she comes to the capital gain section since import is not possible without a 1099-B

she would need to enter each gain/loss separately for broker name use "None" 

type would be C for short-term since neither proceeds nor basis reported to IRS

and F for long-term

entering taxes as she did may have resulted in an overpayment of taxes especially if she had long-term gains

entering all capital gain/loss transactions as a single line item may mean her return did not comply with the tax laws that require detailing each trade and providing info such as date acquired, date sold, cost and tax basis. The IRS would accept the return but that doesn't mean several years down the road she won't get a notice from the iRS

as an alternative, she could enter those trades as two single line items - one for short term and one for long term on form 8949

using code M

then she prepares form 8453

https://www.irs.gov/pub/irs-pdf/f8453.pdf  checking off the 8949 box

she would then need to manually prepare form 8949 showing each completed trade (purchase/sale)

the form 8453 and forms 8949

are mailed following the instructions  - these are from 2021

If you are filing your tax return using an online provider,
mail to the IRS within 3 business days after
you have received acknowledgment from your
intermediate service provider and/or transmitter that the
IRS has accepted your electronically filed tax return. If
you don’t receive an acknowledgment, you must contact
your intermediate service provider and/or transmitter.
Mail Form 8453 with the 8949s to:
Internal Revenue Service
Attn: Shipping and Receiving, 0254
Receipt and Control Branch
Austin, TX 73344-0254

[seccam]

Last year her income for all sources was less than std deduction ..so no question of overpayment as no tax was due.

She did file 1116 - foreign tax credit and declared tax paid $824 but of no use because she did not owe any US tax

but this year i.e. 2021 her total income is about 15k so its little more than std deduction. so she will owe little tax but she has paid foreign taxes about  $1100 - so she can get foreign tax credit which can offset her tax liability ? correct me if am wrong.

You are right ..IRS has accepted but that does not mean they can send a notice in future ...yes than can but at that time can we show the details at that time ? what is the penalty for not declaring individual trade required by tax law ?

Because entering each trade by choosing 8949 option C (only short term) and sending form 8453 by mail is very difficult - as statement received from foreign broker is not really clear ..they dont believe in each trade..they just give total capital gains for the year  

[rjs]

If the broker does not provide the details of each trade, she has to enter the details from her own records of the trades.

TurboTax provides for entering an explanation where it is required by IRS rules. The IRS does not want explanations that are not required by the rules. The IRS instructions for Form 1040 say "Don't attach correspondence or other items unless required to do so."

[seccam]

I am not asking about attaching additional document ..I am asking is there any way we can write couple of lines to explain that this 'other' income is from foreign capital gains and foreign interest?

[VolvoGirl]

There are description lines by line 8z other income ________.  I think when you enter other income you can enter a description.

[rjs]

Here's how to enter "other income" in TurboTax so that it will be reported on Schedule 1 line 8z with a description that you enter. However, as noted in the answers to your other post of the same question, this is not the correct way to enter foreign interest or capital gain. In particular, if you enter the capital gain this way it will be treated as ordinary income, not capital gain, and you will not get the lower tax rates for long-term capital gain.

• Click the Federal Taxes tab.
• Click Wages & Income.
• Click "I'll choose what I work on."
• On the screen "Your 2021 Income Summary," scroll all the way down to the last section, "Less Common Income." Click the Start or Update button for the last topic, "Miscellaneous Income, 1099-A, 1099-C."
• On the next screen, "Let's Work on Any Miscellaneous Income," scroll down and click the Start or Update button for the last topic, "Other reportable income."
• The next screen asks, "Any Other Taxable Income?" Click Yes.
• On the next screen, "Other Taxable Income," enter a short description such as "Foreign capital gain" and enter the amount. Click Continue.
• On the next screen click Done.
• You will get a couple more screens with unrelated questions. If they don't apply to you, just answer No and click Continue.