The instruction is the fine, but it requires careful reading.

There are two conditions that you do not make adjustment:

• Line 5 of the Qualified Dividends and Capital Gain Tax
Worksheet is greater than zero.
• Line 23 of the Qualified Dividends and Capital Gain Tax
Worksheet is less than line 24 of that worksheet.

When you do need to make adjustment, there are two conditions for exception. I do not satisfy the exception conditions, but I satisfy the conditions not to make adjustment.

Now a new question: is it allowed to report qualified foreign dividend as non-qualified foreign dividend?

The reason is while qualified dividend pays less tax, it also gets less foreign tax credit due to the required adjustments in line 1a and line 18 of form 1116. The foreign tax credit carryover is useless as there will not be foreign income for next 10 years. While non-qualified foreign dividend pays regular tax and no adjustment is needed, and it can turn out to be better. Hence the question, can I report qualified foreign dividend as non-qualified, and long term foreign capital gain as short term?

To show the differences between claiming foreign qualified and non-qualified dividend, we use the following income on joint return of two senior citizens:

scenario 1:

qualified US dividend 300k
non-qualified India dividend 80k with 28k foreign tax paid
w-2 income of 30701
foreign tax credit 19743
tax = 39316

scenario 2:

Same as scenario 1 except the foreign dividend is qualified
foreign tax credit 6969
tax = 42751