Question

Deduction for Foreign Tax Credit

Forum|Forum|3 years ago
March 9, 2023
1 reply
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I received $764 in Foreign dividends from my investments in 4 Foreign companies. I am assuming I can not get a deduction as I am over the $600 for a joint return. Is this correct??

To get a credit I must fill out Form 1116. When I try it asks for the Interest not Dividends. I am confused. My tax info is on a 1099-Div.

P

pk12_2

Employee

@Joe299 , assuming that your world income is hugely larger than the foreign dividend income , imho, it may be better to use the safe harbor ( up to $600 for joint filer ) amount of foreign Tax Credit against US taxes , rather than go through the limitation process of form 1116 ( also simpler and you would get a higher credit ).

Assuming that your foreign tax was US$764, if you enter this as US$600 -- you would all $600 as credit against your US Federal tax liability.

If you use the form 1116, the credit allowable in 2022 would be based on a ratio of foreign income to world income and is always less than 1 ( if you have any US income).

Is there more I can do for you ?