Foreign Tax Credit

LeeG
LeeG Member Posts: 3 Newcomer
in Filing my taxes

I've had an accountant or enrolled agent do my taxes for the last 40 years, but this year a friend encouraged me to do my taxes myself, using FreeTaxUSA. I'm beginning to regret this decision, but I haven't given up yet. 

Here's an issue I'm struggling with

Vanguard reports several thousand dollars of foreign taxes withheld. FreeTaxUSA asks whether I want to take this as a credit or a deduction from foreign taxes. It recommends the credit, but this leads to questions about foreign passive income.

The Vanguard consolidated tax document does have a page of "Supplemental Information", and it contains what appear to be foreign source income percentages for the two funds at issue, Emerging Markets and Developed Markets. However, this information is a confusing. It lists percentages that it describes as "foreign source inc total," "foreign source inc qual" and "foreign source inc adj." (the latter, adjusted, is zero for both funds).

I would appreciate advice on how to use this information to calculate the credit. Common sense tells me to simply apply one of these percentage (which one?) to each of the foreign income numbers, but when it comes to taxes I don't trust my common sense.

Thanks in advance

Tagged:
· Share on Twitter

Comments

Categories