Name the Country?

[Snaggletooth]

Drake has held up some foreign tax credit because we could not name the country.

Is this necessary? Many of my clients have extensive brokerage 1099-DIV with foreign taxes paid. Sometimes the security shows amount attributable to foreign income but most of them do not name the country. In the case of International Mutual Funds, there could be dozens of countries, and this is the source of MOST foreign tax paid.

Has something changed this year? IOW, name the country or forget about the credit??

[S T]

Snags

Form 1116 - Part 1 - Country

Enter VAR - Various Prints

See the drop down list - VAR it is at the top

Or from Sched B - Dividend Inc line 7 - same VAR and see drop down list

I entered and do not see a error message or note

Maybe post on the Drake Board

Sandy

[ATSMAN]

Drake has held up some foreign tax credit because we could not name the country.

Is this necessary? Many of my clients have extensive brokerage 1099-DIV with foreign taxes paid. Sometimes the security shows amount attributable to foreign income but most of them do not name the country. In the case of International Mutual Funds, there could be dozens of countries, and this is the source of MOST foreign tax paid.

Has something changed this year? IOW, name the country or forget about the credit??

I apologize on behalf of Drake because they did move a check box "Form 1116 Not required" to the bottom of the screen from the top where you entered the foreign tax.
This has caused some confusion and there is a long thread on this issue at the Drake Forum. They failed to tell us of this change!

Enter the foreign tax paid on the DIV screen. For country use the drop down box and select various and then go to the bottom of the screen and check Form 1116 NOT required. Then hit calculate and you should get 2 green check marks assuming there is no other issue that it is ready for e-file.

[FEDUKE404]

Dealing with foreign tax data entry

I apologize on behalf of Drake because they did move a check box "Form 1116 Not required" to the bottom of the screen from the top where you entered the foreign tax.
This has caused some confusion and there is a long thread on this issue at the Drake Forum. They failed to tell us of this change!

Enter the foreign tax paid on the DIV screen. For country use the drop down box and select various and then go to the bottom of the screen and check Form 1116 NOT required. Then hit calculate and you should get 2 green check marks assuming there is no other issue that it is ready for e-file.

I continue to be perplexed by recurring board comments such as "Drake does this or that. . ." Sounds like an evil and controlling tax monster at times. . .

So the Drake user gets to make the choice of "Form 1116 not required" ? ? ?

One would think the tax software should handle that automatically, based entirely upon the TOTAL foreign taxes withheld during the year. IIRC, if the foreign taxes >$600 for a MFJ tax return. . .there is no choice to "avoid" Form 1116. Or maybe my recollection of the IRS Form 1116 fine print is hazy.

The only "choice" I recall was whether to use the allowable foreign taxes as an itemized deduction OR as a tax credit.

FWIW: I think there is also a common software choice as to entering "RIC" instead of the name of country/countries, if the circumstances merit it? ?

Most brokerage statements break down foreign source income and directly related foreign taxes. For instance a company from Canada and a company from France, both with separately stated dividends. I'm not sure you can properly use "various" for circumstances such as those. It's really not that difficult to enter the "Canada" income/taxes and then separately enter the "France" income/taxes, so as to populate the correct columns on any (required) Form 1116.

FE

[TAXNJ]

Yes

I continue to be perplexed by recurring board comments such as "Drake does this or that. . ." Sounds like an evil and controlling tax monster at times. . .


FE

Not only the software mentioned in this post but other software in other posts. Think some posters are missing the fact that a good software company has tech. support and videos on how to use their software and to address user issues.

[ATSMAN]

I continue to be perplexed by recurring board comments such as "Drake does this or that. . ." Sounds like an evil and controlling tax monster at times. . .

So the Drake user gets to make the choice of "Form 1116 not required" ? ? ?

One would think the tax software should handle that automatically, based entirely upon the TOTAL foreign taxes withheld during the year. IIRC, if the foreign taxes >$600 for a MFJ tax return. . .there is no choice to "avoid" Form 1116. Or maybe my recollection of the IRS Form 1116 fine print is hazy.

The only "choice" I recall was whether to use the allowable foreign taxes as an itemized deduction OR as a tax credit.

FWIW: I think there is also a common software choice as to entering "RIC" instead of the name of country/countries, if the circumstances merit it? ?

Most brokerage statements break down foreign source income and directly related foreign taxes. For instance a company from Canada and a company from France, both with separately stated dividends. I'm not sure you can properly use "various" for circumstances such as those. It's really not that difficult to enter the "Canada" income/taxes and then separately enter the "France" income/taxes, so as to populate the correct columns on any (required) Form 1116.

FE

I actually like the way Drake allows you to either checkoff Form 1116 not required or dive into the form. I seem to recollect ATX and Taxworks had the same option.

The issue this year was the placement of the little checkbox which in my opinion should be next to where you enter the foreign taxes paid!

[FEDUKE404]

Can you bend IRS rules for filing Form 1116 ?

I actually like the way Drake allows you to either checkoff Form 1116 not required or dive into the form. I seem to recollect ATX and Taxworks had the same option.

The issue this year was the placement of the little checkbox which in my opinion should be next to where you enter the foreign taxes paid!

My only comment was why is there even a Drake user checkbox for "required" existing in the first place? The IRS rules pretty much establish that issue, not unlike whether a Schedule B is/is not "required."

The only Schedule B option I can select is to always print a Schedule B. Some clients like that. But I have zero control (well, I guess I could override something??) as to determining when a Schedule B is actually required/included by the IRS guidelines.

It is a valid scenario for the preparer to be able to use the option to take a foreign tax credit (with or without Form 1116) by choosing to take the foreign taxes as an itemized deduction on line 8 of Schedule A. But no one yet has convinced me of a situation where I can make a preparer choice as to when a Form 1116 is required for said tax credit. One CPA I know has a client who usually had around $100/month in foreign taxes, and said CPA stated he just "simplified things" by not using Form 1116 and putting $600 MFJ maximum in the line on page 2 of Form 1040. (Maybe he used Drake software?) Heck, does Drake have a check box for "check if depreciation is required" for rental properties? ? ?

Back to work.

FE

[ATSMAN]

My only comment was why is there even a Drake user checkbox for "required" existing in the first place? The IRS rules pretty much establish that issue, not unlike whether a Schedule B is/is not "required."

The only Schedule B option I can select is to always print a Schedule B. Some clients like that. But I have zero control (well, I guess I could override something??) as to determining when a Schedule B is actually required/included by the IRS guidelines.

It is a valid scenario for the preparer to be able to use the option to take a foreign tax credit (with or without Form 1116) by choosing to take the foreign taxes as an itemized deduction on line 8 of Schedule A. But no one yet has convinced me of a situation where I can make a preparer choice as to when a Form 1116 is required for said tax credit. One CPA I know has a client who usually had around $100/month in foreign taxes, and said CPA stated he just "simplified things" by not using Form 1116 and putting $600 MFJ maximum in the line on page 2 of Form 1040. (Maybe he used Drake software?) Heck, does Drake have a check box for "check if depreciation is required" for rental properties? ? ?

Back to work.

FE

Drake, ATX and Taxworks had it right in my opinion because the IRS rules allow you to check off the box Form 1116 not required if the foreign taxes paid are not more than $600 filing MFJ ($300 single) and income is passive category reported on 1099-DIV /INT. In 99% of the returns that I have encountered this is the case so the form not required checkbox is appropriate. For those where a Form 1116 is more appropriate you certainly have that option as well.

As long as the preparer knows what he/she is doing, I support the checkbox option!