Question

Can I get foreign tax credit for taxes paid on foreign stock dividends in an IRA?

Forum|Forum|7 years ago
June 1, 2019
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TurboTax Deluxe Windows

No, you can only get a foreign tax credit for taxes paid on income that is taxable on your Federal return.

Income earned (such as dividends) within your IRA account is not taxable on your personal return until you take a distribution from the IRA.

Even then, the distribution from the IRA does not retain the character of the earnings that were in the account. This means that if you took a distribution, then you cannot say that the distribution was due to the foreign stock dividends, and therefore you must claim the foreign tax credit.

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S

stevenkay54

Your answer confuses me. You say if you are taking distributions from an IRA that paid foreign taxes you must take a credit. Well that sounds like if an IRA paid foreign taxes and if you take a withdrawal from the IRA you CAN claim the foreign taxes paid as a credit. Well a credit is what most people would take anyway. I'm confused.