Question

I do not have 1099-B form for foreign capital gains. I reported it as such. Turbotax is asking to upload copy of the form. What should I do?

Forum|Forum|5 years ago
February 12, 2021
4 replies
0 views

I selected the option - "Short-term did not receive 1099-B form" while reporting these gains.

TurboTax Premier Online

1099-B isn't applicable to foreign capital gains, so you'll want to remove it from your return. Here are links that explain how to delete forms:

TurboTax Online
TurboTax CD/Download software

You may be eligible for the Foreign Tax Credit.

You'll can report foreign capital gains and claim the Foreign Tax Credit on Form 1116.

Here is an IRS link about Form 1116.

Here's how to get to Form 1116 in TurboTax:

Make sure you've entered all your foreign income.
From within your return, search for foreign tax credit and select the Jump to link in the search results.
Answer Yes to Did you pay foreign taxes in 2020 or have credits to use from a prior year?
Follow the instructions to get the credit or deduction.

There's a deduction available as well as well as a credit but in most cases, taking the credit works out better. We'll help you decide which one's best for you when you go through this section.

If you choose to take the credit (most people do), we'll attach Form 1116, Foreign Tax Credit if your situation requires it.

You may also be required to file two special forms with your 2020 tax return:

FBAR (FinCEN Form 114)

A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. The name of the form to file If you have any questions or require technical assistance using the BSA E-Filing system, you may call them at 866-270-0733; or if calling from outside the United States, 313-234-6146.

Report of Foreign Bank and Financial Accounts

Foreign Accounts Tax Compliance Act (FATCA)

Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. The IRS receives information about foreign assets on Form 8938 on your federal tax return.

You must file the FBAR electronically through the Financial Crimes Enforcement Network’s BSA E-Filing System. You don’t file the FBAR with your federal tax return.

Here is an IRS article that explains the comparison between FATCA and FBAR requirements.

D

darshan_shahAuthor

Thank you for your response. I followed the instructions and try to delete the two 1099-B forms related to Capital gains but TT is not deleting those even though the message says forms are deleted. There are total 3 forms related to this - one says 1099-B Worksheet, second one says 1099-B Worksheet -- Capital gn and third one is same as second one. Second and third seem to be related to my entries of ST and LT gains I recorded.

So, I went ahead and deleted the first 1099-B Worksheet form as well but that deleted all my entries so that that's not good.

Any recommendations about this. I also spoke with TT expert over the call but she was not able to help out.

I am kind of stuck now.

L

linaj20201

Have you tried this way to remove the forms?

To delete the Form 1099Bs in the TurboTax online version:

1. Sign into your account, select Pick up where you left off

2. Select Tax Tools, click on the drop down arrow

3. Select Tools

4. Under Other helpful links, choose Delete a form

5. Select Delete next to the Form 1099-Bs and Continue with My Return

When you receive a Form 1099-B, it generates capital gains taxes. Generally, when you sell something for more than it cost you to acquire it, the profit is a capital gain, and it may be taxable. On the other hand, if you sell something for less than you paid for it, you may have a capital loss, which you might be able to use to reduce your taxable capital gains or other income. Also note that:

You pay capital gains taxes with your income tax return, using Schedule D.
The data from Form 1099-B helps you fill out Schedule D and Form 8949 if needed.

For more information, click here: 1099-B

@darshan_shah

T

Taxmatters

Employee

I assume you are from India or in India.

Please confirm both 1099-INT and 1099-B or any informational returns don't apply to India correct?

Because neither banks or brokers don't provide such returns to IRS or to their clients.

Further I added Interest and capital gains from India as other reportable income under miscellaneous income category.

But when I see deduction/credit section - it does not show foreign tax credit ..so I assume unless you enter income under interest and investment income turbotax will not calculate foreign tax credit correct?

So how to solve this issue so that I can still file tax return with foreign income(no US income at all) and take tax credit ?

FYI - total foreign income is less than standard deduction so technically not owing anything to IRS but paid tax to India so can I use that tax credit to future years ?

DaveF1006

You still need to report this as a foreign tax credit. Here are the steps.

Open (continue) your return in TurboTax
Go to federal>deductions and credits>estimate and other taxes paid
Foreign taxes >start
When you reach the screen Do You Want the Deduction or the Credit? select the option you prefer for your situation
If you select Take a Credit:
- Continue through the screens until it asks for income type. Here select passive income.
- When you reach the screen Country Summary, select Add a Country. Add india
- Other Gross income enter the gross proceeds from the equity fund
- Don't enter the expenses as this may negatively impact your Foreign Tax paid.
- Foreign losses. You may wish to leave this blank.
- Foreign taxes paid. Select the option that mentions foreign taxes paid on rent, royalty or other income
- Be sure to indicate the date these were paid
- Answer the questions about your foreign income, taxes, and expenses on the following screens
- When finished, you'll be taken back to the Country Summary screen. If you have income from other countries to enter, select Add a Country. Otherwise, select Done

Continue through this section until you reach the end. Make sure you enter any carryovers that may have occurred in a previous year.

@jvembuna

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G

glance56

Since this conversation is in the context of Foreign Capital Gains from the sale of foreign stocks, where there is no 1099-B, but the 1099-B information is manually input in TurboTax and then we come to Foreign Tax Credit section - can you please clarify what is meant by "Other Gross income enter the gross proceeds from the equity fund" from your response?

For example, let us assume I had bought foreign stocks worth $50,000 a couple years ago, and sold those for $60,000, resulting in long term capital gains of $10,000, all in foreign currency.

In the workflow for Form 1116, when I come to the "Other Gross Income - Country X" screen, what should I put in the "Amount for Country X" field? Should I input $60,000 (which is the proceeds from the sale of the foreign stocks), or should I input $10,000 (since that's my gain)?

R

RobertB4444

It depends on how Country X taxed you. Put the amount of gross income taxed by Country X in that box.

@glance56

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G

girigiri

Hi:

I have paid Indian taxes on capital gains on sale of a stock and a bond and in the "Investment Income" section of Turbo Tax when I enter the information related to the stock sale (Ex: Proceeds, date of sale, cost...etc.,) It does not ask for input regarding Foreign taxes paid on the proceeds.

Where should I enter the same?.

Regards,

M

Mike9241

You have difficulty because Turbotax put the entries for this type of FTC under deductions and credits >estimates and other taxes. once you get to this section select start/update for Foreign Taxes. Note that Turbotax says that you must enter foreign taxes reported on dividends, interest and K-1 before starting this section. read each page. you'll come to a page that asks you to select a method for computing the FTC for alternative minimum tax purposes. if you choose a method in the past, you must continue to use it. if not you get to select either the simplified or other method. Can't say which is best for you. For ease of entry, I chose the simplified method.

more screens until you get to one that asks for the category which is passive - just like dividends and interest

more screens - read them and answer the questions

another screen asks for description and amount - enter foreign capital gains and the amount of the gain - note amounts must be converted to US $

https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates

more screens read what they ask and answer as applicable

finally, a page that asks about foreign taxes paid to India

select the question that starts with No

enter the FTC paid as converted into US $ on the line for other income

enter the date paid in 2023

done

based on the tax rate in India vs your effective US rate you may not get full credit for the taxes paid to India

you should review the 1116 but that can't be done until you pay your fees. Finish the return first before paying and reviewing.

G

girigiri

Hi Mike9241:

Looks like for FTC, dividends should be only "Qualified Dividends" and not ordinary dividends and taxes paid only on qualified dividends qualify for FTC!!!
Again, for Annuity income, looks like there is no place to add Foreign taxes paid in Turbo Tax. (I may be overlooking something)
At least for interest income there is a place to enter "Foreign tax paid"

Let me know your thoughts.