Question

Foreign Tax Credit form 1116 and Fidelity

Forum|Forum|5 years ago
March 18, 2021
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Fidelity has a section at the end of the 1099 where foreign taxes are summarized. The income attached to the taxes is shown. On mine the Qualified dividends are almost zero and the unqualified dividends are $8K. On page 1 the difference between the total dividends and the qualified dividends are $7K. TT says that implies that the unqualified foreign taxes can't have unqualified of $8 so it says the qualified must have been $1K.

Can you explain what I should do? When I look back at the fidelity report in the detail section it certainly suggests that the QD are > $1K but the summary says $0. When I speak with Fidelity they so far have been of no help.

Right now I would be inclined to get the QD from the detail page although I feel logically that the summary should be a better answer. After all a RIC could attract foreign taxes for just part of its holdings and the QD might be better attached to the non foreign part. That said, this RIC is an emerging market fund so it seems like essentially all the income would be subject to foreign tax.

R

rogge1722

Employee

It is a good idea to know if TT needs the amount of foreign qualified dividends or not. If it needs the amount, TT will make “adjustments” which means TT will reduce the amount that will be used.

If the foreign qualified dividends are $20,000 or more, the adjustments must be made. If the foreign qualified dividends are less than $20,000, then do the following: check the amount on line 5 of the Qualified Dividends and Capital Gains Worksheet or line 18 of the Schedule D Tax Worksheet.

If the amount is greater than $326,000 if married filing jointly or greater than $163,000 if filing single or married filing separately or head of household then the foreign qualified dividends must be adjusted.

In your case, it is most likely you are below the threshold either by the amounts or the income. If during the interview a screen appears requesting the foreign qualified dividend amount it can be ignored.