Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Why are Dividends Appearing as Foreign Source?

Highlighted
Level 2

Colleagues:

I copied information from a 1099-DIV to Screen 12 boxes (1a, 1b, 2a, and 2b). I also had small numbers to input in field 5 (Section 199A dividends) and from box 7 of the 1099 some foreign tax paid.

My Form 1116 is reporting all of the Screen 12 data as foreign source.  But it isn't.  I assume that I have entered something incorrectly, but I cannot see where or how.

Can anyone help?!

Micah

Labels (1)
0 Cheers
1 Solution

Accepted Solutions
Highlighted

Choose your own adventure. This is what we get paid the big bucks for.

 

Depending on materiality:

- Elect not to file the 1116, because then you don't care

- Assume all are foreign

- Look at the dividend detail and pick out all the items that have foreign taxes withheld and assume those are 100% foreign

- Look at the dividend detail and pick out all the items that have ADR in the name and assume those are 100% foreign

- Google every mutual fund to determine the percentage of foreign source income, then multiply

- Ask your client to ask their investment advisor, whose hapless assistant surely has nothing better to do and wouldn't consider just blowing you off

View solution in original post

10 Replies 10
Highlighted

Directly above where you enter the amount of foreign tax are boxes to enter how much of the divs / QDivs / CGDs are foreign source.

Highlighted
Level 15

If you make an entry such as the image shows, just to get the $23 foreign tax and you leave the Percentage foreign .... for the Ord, Qual and CG dividends blank, the program ASSUMES all dividends are foreign. You must input the portion of the totals that are foreign for each foreign tax entered FOR ALL 3 FIELDS. 

Capture.JPG

 


ex-AllStar
Highlighted
Level 2

This is very helpful.  But the 1099 does not report how much foreign-source income there was!  Where do I get that info?

0 Cheers
Highlighted
Level 15

Those 2..35..46 pages of back up that comes from the brokerage house has the info.  You often have to hunt/peck thru them to determine which dividends generated the foreign tax withheld.  A *few* brokerages provide a total; I *like* those companies. 

Former Chump... umm.... AllStar.
If a post answers your question, click on *Accept as solution* for future searches
0 Cheers
Highlighted

Choose your own adventure. This is what we get paid the big bucks for.

 

Depending on materiality:

- Elect not to file the 1116, because then you don't care

- Assume all are foreign

- Look at the dividend detail and pick out all the items that have foreign taxes withheld and assume those are 100% foreign

- Look at the dividend detail and pick out all the items that have ADR in the name and assume those are 100% foreign

- Google every mutual fund to determine the percentage of foreign source income, then multiply

- Ask your client to ask their investment advisor, whose hapless assistant surely has nothing better to do and wouldn't consider just blowing you off

View solution in original post

Highlighted
Level 15

- Ask your client to ask their investment advisor, whose hapless assistant surely has nothing better to do and wouldn't consider just blowing you off

LOL Phoebe...  oh to be a fly on the wall when that call is made 😂

Former Chump... umm.... AllStar.
If a post answers your question, click on *Accept as solution* for future searches
0 Cheers
Highlighted
Level 2

You people are ridiculously helpful!  THANK YOU!

Highlighted
Level 15

Can we quote you on that the next time some grumpy poster rags on us for having a sense of humor?

Former Chump... umm.... AllStar.
If a post answers your question, click on *Accept as solution* for future searches
Highlighted
Level 2

I would say yes but I don't want to get caught in the cross-fire!

0 Cheers
Highlighted
Level 1

On Screen 12 where you entered the dividends & cap gain distributions, scroll back down to the Foreign tax credit section and enter only the ordinary dividends, qualified dividends, and cap gain distributions from which foreign taxes were withheld.