Question

1099-DIV Foreign Tax Credit

Forum|Forum|3 years ago
March 13, 2023
2 replies
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I have two separate 1099-Div forms imported from my brokers. Each reflects Foreign Taxes paid from multiple jurisdictions (each has three countries). When using the Step-by-Step guide it asks for all the countries on Form 1099(s). After entering all the countries. I select a country from the list of countries entered and it then asks to select one of my two brokerage accounts. When the first country is complete I try to enter the data for the next country from the same 1099 DIV and the brokerage account is no longer listed as an option to select.

Question, am I to report only an aggregate dollar value and list the countries as "various" or is this to be manually entered.

Kevin

LindaS5247

You could try to enter "RIC" or various for the countries. I have seen both used.

The other workaround that is used is to create "Dummy" Forms 1099-DIV for each of the countries. This workaround is as follows:

While using TurboTax where you have to fill out Form 1116, it can support only one country per Payer. In the past, if there were more countries than Payers, using “Various” was the technique used to restore the 1 to 1 country/payer ratio. The following technique restores this 1 to 1 ratio by creating additional payers to equal the number of countries.

This addresses the issue of a 1099-DIV with Box 7 showing foreign tax paid to multiple foreign countries and it is necessary to identify and list the countries individually on Form 1116. This is done by utilizing "Dummy 1099-DIV's" as illustrated by the following example.

We have a 1099-DIV with Box 7 displaying the total tax paid to 3 foreign countries we will call “A”, “B”, and “C”.

Navigate to the “Here’s the dividend info we have so far” screen displaying the name of the Payer. This will be our Main Screen. Bring the Payer up in EDIT mode. Change Box 7 to the amount paid to “A”. Click “Continue “. Either the Main Screen will appear or 2 consecutive screens asking for dividends paid and the source country. If the latter occurs, insert the data for “A”, then continue to the Main Screen.

Click on the New Payer button. We will name this Payer “Dummy1”. In Box 1a, put a zero. This prevents TT from issuing an error. In Box 7, enter the tax paid to “B”. Leave the remaining boxes blank. Click “Continue” back to the Main Screen.

Again open up a New Payer. We will name this “Dummy2”. Put a zero In Box 1a and in Box 7 the tax paid to “C”. Click “Continue” back to the Main Screen.

Now when we go to the Foreign Tax Credit Interview Section, we are positioned to enter all the necessary data for each country individually.

Now we consider countries “D”, “E”, “F” etc.

If either of these solutions don't work please fell free to contact us back here on TurboTax Community or click here for information on Turbo Tax Support.

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R

Rhone07Author

LindaS5247 - Thanks for the response. I had a couple of technical issues with the suggested solution, however, was an excellent framework to resolve my issue.

When I created the "Dummy" 1099-Div form and entered Zero in Box 1a, the total tax paid to country A in Box 7 and leaving all other boxes blank, on the 1116 Comp Wks TT would correctly enter the dividend for country A on line Part I 1h (Qual. Dividends and LT Capital Gains). TT also entered the same amount on lines Part I: 1i (Section 1250 (25%) Capital Gains and Part I: 1j (Collectibles (28%) Capital Gains). It was no possible to override nor in the Step-by-Step process could I determine where it was picking it up for these two lines.

As a working around I went back to the Step by Step process and navigated to "Here's the dividend info we have so far" screen that displayed the Form 1099-Div from Schwab and the Dummy 1099-Div form I created. There I edited the Schwab 1099-Div form, reducing the amount in Box 1a and 1b by the amount of dividends received from country A. I also reduce the amount in Box 7 by the Foreign Tax paid to country A.

In the Dummy 1099-Div form I entered the country A dividend in box 1a and 1b. In Box 7 was the Foreign Tax paid to country A.

These modifications seemed to correct the issue for me

Kevin

L

Linthorn

So this problem is an error in the software and has not been corrected since 2019. I own a number of international stocks and so would have to set up 16 1099-DIV entries, all of which do not correspond to actual documents. This needs to be fixed so that this isn't necessary.