TurboTax and Form 1116

William · Post by **William** » Sat May 01, 2010 3:20 pm

I'm a US/CDN dual citizen living in Canada and doing my US taxes for the first time with TurboTax. I've just finished entering in my 2009 data and TurboTax indicates that Form 1116 isn't necessary. This is a little surprising as I've had to use a 1116 for the past six or seven years but I did have reduced earnings income in 2009 and a negative Cap Gains/Loss value. I'm wondering if I did Form 1116 anyway, would I be able to carry over unused credits for future years? If so, or just for future reference reporting dividend and interest income with TurboTax, should I calculate the taxes paid to Canada and enter the value into Box 6 Foreign Taxes Paid for each individual payer? Or would I just calculate from the totals of each source and enter them directly into a 1116? Any help would be appreciated. Thanks.

nelsona · Post by **nelsona** » Mon May 03, 2010 9:39 am

If you want to carry forward and foreign tax from 2009, you need to submit the 1116.

It is unlikely that you don't need 1116, unless you have absolutely no Cdn income other than your wages that you exclude on 2555. Don't be "creating" 1099's for your investement income, this messes up the software.

I'd need mnore details as to what Cdn income you are claiming on your 1040. You may siomply be able to use the deduction instead this year.

William · Post by **William** » Mon May 03, 2010 11:34 pm

Thanks for your comments, nelsona, I appreciate your help. My 2009 investment income was
Interest and "other income" $800
Dividends $7200 ($800 of which was qualified)
Cap gains distributions $2200
Cap Losses -$5000

Your comment about "creating" 1099s for my investment income made me wonder if I've entered the data correctly. I entered all interest and "other income" (US and CA) into the 1099-INT forms and all dividends and cap gains distributions (US and CA) into the 1099-DIV forms. I couldn't see another way to enter my CA data.

One thing that perplexes me is that this is the first year that I've ever used TurboTax and it has a Capital Loss Carry Over worksheet filled with data that I never entered.

nelsona · Post by **nelsona** » Tue May 04, 2010 5:27 am

Yeah, you can't do that. Ttax is thinking that you earned these dividends thru a US vroker who issued you a 1099. This then allows one to bypass 1116. Do not enter the tax on those 1116' and enter it instaed on 1116 and opt out of the non-1116 route.

nelsona · Post by **nelsona** » Tue May 04, 2010 5:27 am

Its also unlikely that your dividends are qualified.

cfn2007 · Post by **cfn2007** » Tue May 04, 2010 9:07 pm

I understand how "creating a 1099" could mess up Turbotax in situations where you have <$300 in foreign tax credits. This is because you only need the 1116 when your FTC's are >$300.

So if you have FTC's >$300, why would there by any problem with "creating 1099s"? The Turbotax 1099 entry form is simply an entry tool for your data. At least that's always been my understanding. Is there more to it than that???

nelsona · Post by **nelsona** » Tue May 04, 2010 9:19 pm

For the very reason our poster got the "no 1116 needed" option.

And for the qualified dividends, which they are not.

William · Post by **William** » Tue May 04, 2010 11:19 pm

Hello nelsona - I get what I think are qualified dividends from seven different stocks, six of which I own directly in DRIPs and get the 1099-DIVs or T-5 slips from the transfer agent. The other is in my Canadian brokerage account. Three of the stocks are US companies for which I get 1099-DIVs with a value in box 1b for qualified dividends. Four are Canadian companies. Each states on its websites that it is a Qualified Foreign Corporation; e.g. from the Suncor site, "It has been determined that Suncor is a Qualified Foreign Corporation and 100% of our dividends will qualify for reduced rates under the United States Jobs and Growth Tax Relief Reconciliation Act of 2003 in relation to 1099-DIV reporting." Would not these be considered qualified dividends? If I received $300 in dividends from Suncor, couldn't I say that the entire amount was qualified? If this were the case, I assume it would affect the way I calculate 1116 values.

nelsona · Post by **nelsona** » Wed May 05, 2010 6:34 am

Of course, if you are getting 1099-DIVs then you are golden. And checking with the individual firm for those for which only a T slip was issued is the correct method. Good for you.

Most don't do this. All I said was do not create 1099's, you are not. And even if you do, unless Cdn tax was actaully withheld on these dividends, do not put anything under foreign tax withheld.

William · Post by **William** » Wed May 05, 2010 8:56 am

Thanks, nelsona, I value your comments and appreciate the effort you give to me and everyone else in this forum.