Question

How to calculate U.S government interest and foreign dividends

Forum|Forum|4 years ago
February 26, 2022
1 reply
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I'd like to confirm my understanding of calculating U.S government interest as well as foreign dividends from a 1099-DIV sent by my investment brokerage. This is with regards to the following questions asked in TurboTax:

"Enter U.S. Government interest

Enter the amount of dividends reported on this 1099-DIV from XXX that represents interest from U.S. Government obligations."

"Tell us about your foreign dividends

You entered $XXX of foreign taxes paid. Now enter the portion of the $XXX dividends and distributions that was from a foreign country or U.S. possession."

Here's how I have gone about calculating both, which follow a similar process...

For U.S government interest:

The 1099-DIV provides the federal source income percentage for each of my investment funds. For each fund, I add up the qualified and non-qualified dividends I received for the tax year. Then, I multiply the total dividends by the fund's federal source income percentage to obtain the amount of U.S government dividends received. Once I do this for each fund, I add up all of the calculated U.S government dividends to arrive at the total.

Similarly, for foreign dividends:

The 1099-DIV also provides the foreign source income percentage for each fund. So again, for each fund I calculate the total dividends (qualified and non-qualified) received during the tax year and multiply the total by the fund's foreign source income percentage. This gives me the foreign dividends received for a fund. Then, I just add up the foreign dividends received from all of my funds to get the total.

Is this correct?

Not A Product Question

R

RobertB4444

No.

Qualified dividends are a portion of the total dividends in box 1. So you only need to multiply the box 1 dividends by the percentages to arrive at the numbers.

However, your brokerage should be issuing you an annual statement with your 1099-COMB that shows all of the foreign and US Government dividends. They work for you and you pay them. You should make them give you these numbers instead of doing this extra work.

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H

hixen26Author

Just to clarify, my 1099 is from Vanguard, and box 1 (specifically box 1a) contains the total dividends from ALL of my investments. For instance, if I own shares of two different Vanguard funds, the dividends from both of those funds are included in box 1a. Each fund also has its own percentage. So I should be multiplying each of these percentages with box 1a?

Why isn't the percentage of a particular fund multiplied only by the dividends received from that fund?

Last year, Vanguard provided a 1099 that did calculate the foreign dividends for me. But this year, they did not do it for some reason.

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DianeW777

Yes. If you know the foreign income percentage for each fund multiply each by the total in box 1a to arrive at your total foreign dividend income. Essentially add the percentages together and arrive at your total foreign dividend income.

The dividend statement provided by Vanguard will show the foreign tax paid, and the foreign income is usually on a separate page. TurboTax will carry your information to start the foreign tax credit (Form 1116) however you need to complete that section for the credit to be applied.