TurboTax tricks to correctly calculate 1116 form lines 3d,3e

[zoover]

Here is how I got TurboTax to properly calculate 1116, 3d "Gross foreign source income" and 116, 3e "Gross income from all sources" for dividends, both Canada-sourced and US sourced:


0) Remember that US companies' dividends count as US-sourced passive income and Canadian companies' dividends count as foreign-sourced passive income.

1) Go into TurboTax "forms mode" (not "easystep mode")

2) For foreign sourced or partially foreign sourced dividends, on Form 1099-DIV fill in Box 6 "foreign tax paid," even if it is a zero. This is what triggers Turbotax to consider this as foreign income. Be sure to link this to a passive income 1116 form in box 6b and 6c. if you leave 6d blank, the entire amount in box 1a will be considered foreign sourced. Or you can put in the portion of dividends that are foreign sourced.

3) On form 1099-DIV also fill in Box 7 with the country the dividends are sourced from.

And that's it. Seems to calculate 1116 lines 3d and 3e properly for dividends. Okay, great, but here is something I couldn't figure out. How do I get Turbotax to properly calculate 3d and 3e for capital gains?

My understanding from this forum is that as a US-Canadian dual citizen residing in Canada, all my capital gains, including those on US stocks, are foreign sourced income. Unfortunately, I cannot seem to get Turbotax to understand this. All my capital gains are added to line 3e (as they should be) but not line 3d (the foreign sourced income line).

Does anyone know the tweak for the capital gains worksheet to get Turbotax to consider these as foreign-sourced and add them to line 3d too?

Thanks in advance,

[rafa02]

I use TaxAct, but expect the two programs to be similar. I do not add the foreign tax to each 1099-Div or 1099-Int. I simply enter the income and then manually create a 1116 and enter the total of my interest, foreign dividends and capital gains and, of course, the foreign tax paid.

Another way is to enter the foreign tax paid on the 1099 (as you are doing) and then manually create a 1116 for the capital gains. As you can only submit one 1116 for each category, the program should add this to the previously auto created 1116 passive income.

[zoover]

Thanks for the reply Rafa02. Yes I suppose the default is to enter it manually or to do a hybrid manual/auto kludge. I will look into that.

So it seems there is no way to get the capital gains added fully automated like we can for Foreign-source Dividends? If anyone else knows, feel free to comment!

Much Appreciated,

Paul

[zoover]

Okay here is what I did to get capital gains/losses to work:

1) I went into passive income 1116 worksheet (Turbotax "1116 Comp Wks") and on Line 1a added a "Capital Gains" of $1000 (for example). This represents all the positive capital gains I have had on stock trades.
2) Then on I put all of my capital losses on Line 5a, $2000 (for example).

This has the effect on the 1116 passive form of increasing line 3d (foreign source income) by $1000. and increasing the deductions from that income on Line 5 by $2000. (In this example I would have had a net capital loss of $1000.)

Can anyone verify whether this was the proper way to do it?

[pHumhrey]

I had the issue similar to this while preparing to issue the W-2's. Using TaxAct and have no clue how to force to calculate the benefits correctly, got the template from PDFfiller https://fillable-form-w2.pdffiller.com/ No clue, maybe it's the template thing

[alex_071]

Too late for reply here. However, usage of templates makes things not so complicated https://pdfliner.com/w2_form can help to make the filling easier , cause, unfortunately TaxAct didn't help me so much