55549

[#1]

The following diagnostic is generating: Form 1116: foreign taxes input #1 in the dividend screen should be entered as “other country various” entry in the “name of foreign country” input field. For HTKO, select passive category income-I tax HTKO” entry in the category of income input field. The program will automatically generate form 1116 passive category income and form 1116 general category income. “Name of foreign country” input field is not required. REF 55549. Question 1: Are there any ways, of general use, to maximize the foreign tax credit that is allowed on an individual tax return? Question 2: Is dividend income generally considered passive category income for classification on the 1116 form? Thank you, in advance, for your help, anyone.

[sjrcpa]

Yes dividend income = passive income for foreign tax credit purposes. This predates IRC 469 passive income rules, which apply to totally different categories of income.

If taxpayer is not required to file 1116, don't. They'll get the full foreign tax credit. Using the 1116 they probably won't.

[jimhirsch]

Thank you SJR CPA. You saved my client $264; and gave me very helpful information that I can use going forward. Thank you for taking the time and trouble to help.

[sjrcpa]

You're welcome.