US citizen w/Mutual Fund Foreign income

[AZ-Tax]

This form does not have form number only says "Foreign Tax Paid" its on the back side of a 1099-Div that seems to relate to each other. The columns are:

"Foreign tax paid" for which the amt matches Box 6a on flip side.
"Foreign income" for which the amt matches Box 1a on flip side.
"QDI-Eligible foreign income" for which the amt matches Box 1b on flip side.
"Foreign income after QDI adjustment" for which NO box on the 1099-Div has a match.

Now I have another "Foreign Tax Paid" from Vangaund with different numbers but no 1099-Div on back side.

I had ProSeries tech support on line twice and looked over the 1116 and 2555 and could not locate anywhere to enter "Foreign income"

[BP.]

I had ProSeries tech support on line twice and looked over the 1116 and 2555 and could not locate anywhere to enter "Foreign income"

Line 1(a)

Instructions here:

http://www.irs.gov/instructions/i1116/ch02.html

"On Form 1116, check box a (passive category income), enter the dividends on line 1a, and write “Dividends” on the dotted line."

The stand alone Vanguard "Foreign Tax Paid" document will have the corresponding dividends on a separate 1099-Div, with the same amount of foreign tax paid listed in the appropriate column.

[FEDUKE404]

Foreign income entry

Most software I have encountered has a specific entry line or two on the same "form" where you enter the Form 1099-DIV information.

Such usually includes amount of foreign tax withheld, amount of foreign income related to said tax, and country of origin. For some mutual funds you enter RIC. You generally have the option to use the tax as a tax credit, or send it to Schedule A as an itemized deduction.

If the Form 1099-DIV is for a specific company, such as Barcelona Shipping, then the full amount of dividend income is used for the foreign income. In the more common case, where an investor has a brokerage account with some foreign stocks/mutual funds in the mix, then you have to do some digging to find the actual income specific to the foreign tax withheld.

There should be no need for you to "start" a Form 1116 as everything you enter in the Form 1099-DIV fields should populate most of that form, i.e. "passive" and income and tax withheld and country and even (perhaps) Form1099 as "paid."

All of this assumes, of course, that you even need to file a Form 1116 in the first place. You may, however, need the same information for your state tax return to calculate the appropriate credit.

I'm not quite sure ProSeries can help you much on this issue. It's more like hide 'n seek to find the information on the documents you already have.

FE

[Lion]

And, if not over $300 ($600 MFJ) you can opt to not complete 1116 and just take credit if all passive income reported on forms such as 1099-DIV. I use 1116 if there's no tax liability and I want the carryover (or if over the limits or not passive income). Sometimes the itemized deduction works best. But, usually the credit w/o 1116.

[NSNM]

Relating to Form 1116

If there is no foreign tax deducted from interest or dividend or capital gains,
and hence no foreign tax credit to be calculated or available, resulting in no
Form 1116 to be prepared and attached to the return. Is this understanding right ?

One other thing. ATX software automatically generates Form 1116 when there is
input of any income entry as foreign, e.g. rental property located in foreign country
or interest and dividend income entered as foreign sourced, even if no foreign tax
is deducted from foreign income.

Is this because of AMT income adjustment ?

Is there a need for preparing Form 1116 ?

When information flows into this Form, it gets complicated to prepare especially
carryover part of the credit. It is just my opinion.

[Lion]

Don't gyp your client out of a carryover just because it's complicated.

If your client can get the credit and use the credit and it's from passive income and not over the limits, then elect to receive the credit without filing form 1116.

If he paid no foreign tax, then why are you filling out 1116?

[JG EA]

But if the carryover is $25 and you'd charge $50 for the form then I'd delete it.

[Lion]

If he has over $300 in foreign taxes, you can raise your rates! If he doesn't, you don't need the form to get him the credit or deduction so don't have to charge $50.

[BP.]

Looking over an 1116 as I'm assembling a return, and I see a line for "high tax kickout."
Jeez, I never even heard that term before!!! There's always a reason to go to the back of the class in this biz.