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Doing my taxes now in TurboTax. In my Individual account, my 1099-DIV reports I paid $15.90 in "foreign tax". It states that "You entered $15.90 of foreign taxes paid. Now enter the portion of the $325.74 dividends and distributions that was from a foreign country and tell us which country you paid those taxes to." I'm not exactly sure which of my holdings (between 14 and 20 stocks or ETFs during 2007) would be considered a foreign based firm (perhaps FCX?). What's the best way to determine this so I can input accurate info into the software?

Additional notes provided below, with the last 2 sentences perhaps providing what I'm looking for.

Thanks
eurobask

Foreign Dividends and Tax

The dividends that were received and reported to you in Box 1a of Form 1099-DIV may include amounts from a foreign country. Foreign tax reported in Box 6 is an indication that you have received some foreign dividend.

The foreign dividend income must be included in your taxable income, but you may be able to get a credit or deduction for the foreign taxes paid. Entering the foreign country and the amount of foreign dividend will help TurboTax determine the amount of any credit or deduction.

The amount of the foreign dividend received is not specifically listed on Form 1099-DIV. To determine the portion of Box 1a that is foreign dividends, look at the paperwork provided by the dividend payer. It should list a foreign amount or a foreign source percentage you can use to calculate the portion that is from a foreign country.
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If $15.90 is all the foreign tax you paid, then tell TT to link to Form 1116, copy 1, column A, that the tax was paid on 12/31/07, to "various" countries, and that the foreign income was $100.

These entries are really meaningless, but will force TT to transfer the entire foreign tax paid to Form 1040, line 51 as a credit.

Ira
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What's the best way to determine this so I can input accurate info into the software?

You answered your own question right here:

To determine the portion of Box 1a that is foreign dividends, look at the paperwork provided by the dividend payer. It should list a foreign amount or a foreign source percentage you can use to calculate the portion that is from a foreign country.

Check your account statements. Look at each dividend payment. The foreign tax withholding will almost always be stated separately from the dividend, making the job easy.

BTW - don't you know enough about your investments to know which companies are foreign? Or which mutual funds invest in foreign stocks?

--Peter
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Thanks folks, I went back and checked the account statements and there was 1 stock (Biovail), whose dividends paid out quarterly had the $15.90 in foreign taxes paid cumulatively throughout 2007 (and total dividends of $106).

Peter - I do know what my mutual fund holds focus on and where, but for individual stocks, sometimes I'm not always sure how to classify them, as they may be based outside the US but do a majority of their business in the US (or vice versa). So would they be a domestic or global/international stock as part of one's asset allocation, in the scenario just described?

eurobask
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Thanks folks, I went back and checked the account statements and there was 1 stock (Biovail), whose dividends paid out quarterly had the $15.90 in foreign taxes paid cumulatively throughout 2007 (and total dividends of $106).

Peter - I do know what my mutual fund holds focus on and where, but for individual stocks, sometimes I'm not always sure how to classify them, as they may be based outside the US but do a majority of their business in the US (or vice versa). So would they be a domestic or global/international stock as part of one's asset allocation, in the scenario just described?


The distinction between US and foreign source income (for tax purposes) is the location where the corporation is headquatered, not the location that generates the income for the corporation.

However, when considering foreign vs. domestic with regard to asset allocation, many investors look at the source of revenue/profits for each investment and not where their corporate headquarters are.

Ira
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Got it, Ira, thank you for the good definition/answer to my question.

eurobask
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