Foreign Tax Credit - Cannot allocate income from countries properly

Forum|Forum|2 years ago
March 30, 2024
4 replies
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I am trying to complete the Foreign Tax Credit (FTC) dialog, and I cannot complete it properly.

The essence of the issue -- as far as I can tell -- is that the FTC dialog expects each 1099-DIV to be associated with one and only one country -- which is not the case for me.

I have 1099-DIV forms from three (3) different brokerages. Each has income from multiple mutual funds/ETFs (called "RIC" in the FTC dialog), and *one* of them has a very small amount of income from a Canadian stock that I hold.

The FTC dialog asks me what countries I received income from -- so I put in both "RIC" and "Canada".

Next, it asks me to pick a country for which I am to report income. If I pick "Canada" it then asks me which 1099 to use.

Once I've done that, I try to allocate the RIC income -- but for the brokerage that had both RIC and Canada income, I no longer see the 1099. So evidently TT thinks that a 1099 can be allocated to only one country.

No matter how I play with the dialog, I can't get it to record my information correctly. I even got a TT rep on the phone who basically led me past that dialog, and to another page where I could (supposedly) enter Country and Income information "by hand" -- but even that didn't work for me.

The really frustrating thing about this is that it's been an issue in TT for years now. Every year the dialog and its behavior changes a little, but the problem remains that TT can't understand that one 1099 may have income from multiple countries.

For the moment, I just allocated everything to RIC, including the small amount that belongs to Canada. But I'd like to do it the correct way.

Is there a workaround I can use that will get me through the TT dialogs?

If not, should I go into the forms and tweak the amounts on Form 1116, adding a column for Canada? (I'm a bit anxious about doing that, for fear I'll really mess something up.)

Thanks for any suggestions.

seghezzo

Exactly the same problems I have and posted a few hours ago. There was a reply but cannot find it

mglauner

You can associate the Foreign Tax paid on a 1099-Div with multiple countries by choosing 'RIC' (Regulated Investment Company) as the Country.

For a second 1099-DIV, do the same.

If your Canadian income/tax is not associated with a 1099-Div or 1099-Int (a pension, for example), then choose 'Passive Income' and the country Canada. You'll have a 1116 for RIC and for Canada.

Here's more info on Claiming the Foreign Tax Credit.

@rccall

rccallAuthor

Hello Marilyn,

Thank you for the reply, but I'm afraid I need further clarification.

It's my understanding that RIC is used for income from mutual funds, ETFs, and the like.

I am trying to record, for one 1099, income that comes from a particular country (Canada) as well as income from RICs.

Am I incorrect in thinking I need to report the Canada income as Canada income (and not as RIC) ?

mglauner

No, if the foreign tax and foreign income are reported on one 1099-Div, then RIC is the correct way to report.

seghezzo

Exactly the same problem I had evidenced.

It seems so easy to aolve the issue:

-when you present a 1099, present a table with

country foreign income foreign tax

-Then check you reported all the taxes

-Then I am sure the form 1116 will report all the countries as needed.

In the meantime, can somebody from TT publish a manual way to fill the info that will not mess up the whole return?

Thanks

DaveF1006

To clarify, what type of an error is your TurboTax return reporting. Just an FYI, since your foreign tax paid is $944, you do need to file Form 1116 to claim the credit.

@nmreed

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nmreed

I got my problem figured out. When I was putting info in the Form 1116 section, I think I didn't get the right information linked to the correct 1099 Div. I solved the problem by going to forms and deleting two Form 1116s. Then I reentered the information correctly and I now have finished my tax returns. I am going to make some notes to myself for next year and will use Turbo Tax again next year. In case anyone cares, I am 85 years old and still doing my own tax return plus one for a daughter.

nmreed

I have the exact same problem. I read somewhere that if the foreign tax is less than $600 you don't have to fill out form 1116. Ours is $944 this year. I read if you override the information on the form, then you can't file electronically. I am thinking about deleting the 1116 forms and see what happens. I have chosen RIC, but the Federal Review still shows an error in the return. Have you been able to file your return?