How to report foreign tax credit on stock sale

Question

A non US broker sold a portion of my RSU that vested.

Subsequently they paid the tax to the foreign govementment

I declared the stock sale in the 1099-b but i am not sure if i can declare the foreign taxes paid as federal taxes. if not how do i proceed?

KristineS · Accepted Answer

Hi Tony20, thanks for writing in with your question.

Foreign income taxes paid can be taken as a credit on Form 1116 or as an Itemized Deduction on Schedule A. The Foreign Tax Credit is generally the better option since a credit will usually reduce your tax liability dollar for dollar.

Our software only supports the foreign tax credit when the foreign income and taxes are reported on a K-1, Form 1099-INT or Form 1099-DIV. Often times interest and dividends shows up on a year-end consolidated statement from a U.S. based brokerage.  If you paid foreign income taxes on income other than interest or dividend income reported on one of those two forms, our software will not be able to support your situation at this time.