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Foreign Passive Income

Ihatetaxes

I have Foreign Taxes Paid on my 1099-DIV. The software is forcing me to enter

Foreign Passive Income. The prompt says it appears on the 1099-DIV . It does not. I have never been asked this before. I checked with my brokerage. They said they have no knowledge of it. Also, the taxes paid arent even to a specific country.. it is listed as various and it is a minor amount.

Software is not letting me continue without entering something - how do i get past it

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Ihatetaxes

i realized that the software had defaulted to claiming a foreign tax credit and that is why it was asking me to put in the income… If I unchecked that, the income was no longer required, but it did give me the credit. In prior years with other software, it gave me a credit without entering the income

WrenD

Hello ihatetaxes,

Thanks for your message, and I totally understand the confusion—this situation can definitely be frustrating, especially when things worked differently in prior years or software.

You're right that the software prompts for foreign passive income and a foreign country when claiming the Foreign Tax Credit, which can be tricky when the 1099-DIV simply lists "various" and doesn't show detailed info.

What likely happened is this:
When claiming the Foreign Tax Credit, there's a question that asks:
“Is your foreign income passed through from a mutual fund or other regulated investment company (RIC)?”
If you answer “Yes” to that, the software won’t require you to enter a specific country—and this is often the right choice for situations like yours, where the foreign taxes were from mutual funds and the country is listed as “Various.”

It sounds like you unchecked the credit option and took the Foreign Tax Deduction instead, which let you move forward. That’s totally fine—many people choose the deduction, and it does still provide a benefit if you itemize deductions.

If you’d rather claim the credit (which can sometimes be more valuable), you can revisit that section, check the box to claim the credit again, and when asked about the source of the foreign income, choose “Yes” for the mutual fund/RIC question. That should remove the country requirement and allow you to proceed without extra detail.

xbrd

I am having the same/similar issue. I backed up and made the change you suggested above, which makes sense and is the correct change. However, I still cannot move forward. I am still being prompted to enter my foreign passive income. I logged out and back in. Same thing. Even with the mutual fund pass through option selected, the software still wants my foreign passive income. Help? Thanks.

MatthewD

Hello xbrd,

Enter the passive income the foreign tax was paid on. Enter any foreign income from dividends, interest, royalties, rents, and annuities. Also include any foreign capital gains. Capital losses will be reported separately.

The amount of foreign passive income must be more than your foreign taxes paid.

taxhater

I'm stuck on this question too. The software won't let me proceed without entering a quantity.

It seem to recall seeing the stated above about RIC and I'm pretty sure I answered it "Yes". But now I can find it again.

This question about foreign taxes comes up every year and usually I can get past it, but not now. I'm done with FreeTaxUSA if I can't move forward.

taxhater

Correction to my previous comment. I was able to find the foreign tax information required by the program. It was buried in a long comprehensive tax document from my investment company.

JanaA

Hello Taxhater! That's great news! It's very common for that information to be buried in the detailed tax summary document that investment companies provide, rather than on the 1099-DIV itself. Glad you were able to track it down and move forward.