How do I adjust my foreign passive income for foreign qualified dividends, capital gain distributions, and capital gains and losses?
To adjust your foreign source qualified dividends or capital gain distributions:
Multiply your foreign source qualified dividends or capital gain distributions by 0.4054 if the foreign source qualified dividends or capital gain distributions are taxed at a rate of 15%, and by 0.5405 if they're taxed at a 20% rate. You adjust your foreign source qualified dividends or capital gain distributions taxed at the 0% rate by not including them in your adjusted foreign gross income.
If you're not sure what rate you're taxed at, take a look at the Schedule D Tax Worksheet or the Qualified Dividends and Capital Gain Tax Worksheet on the Menu Path: Summary screen, whichever you use.
Don't adjust the amount of any foreign source qualified dividends that you elected to include in investment income for the Investment Interest Expense Deduction.
To adjust your foreign capital gains and losses:
See "Adjustments to foreign capital gains and losses" in the instructions for Form 1116 to see if you qualify to use Worksheet A or Worksheet B to adjust your foreign capital gains and losses. If you don't qualify to use Worksheet A or Worksheet B see "Adjustments to Foreign Source Capital Gains and Losses" in Publication 514 .
Multiply your foreign source qualified dividends or capital gain distributions by 0.4054 if the foreign source qualified dividends or capital gain distributions are taxed at a rate of 15%, and by 0.5405 if they're taxed at a 20% rate. You adjust your foreign source qualified dividends or capital gain distributions taxed at the 0% rate by not including them in your adjusted foreign gross income.
If you're not sure what rate you're taxed at, take a look at the Schedule D Tax Worksheet or the Qualified Dividends and Capital Gain Tax Worksheet on the Menu Path: Summary screen, whichever you use.
Don't adjust the amount of any foreign source qualified dividends that you elected to include in investment income for the Investment Interest Expense Deduction.
To adjust your foreign capital gains and losses:
See "Adjustments to foreign capital gains and losses" in the instructions for Form 1116 to see if you qualify to use Worksheet A or Worksheet B to adjust your foreign capital gains and losses. If you don't qualify to use Worksheet A or Worksheet B see "Adjustments to Foreign Source Capital Gains and Losses" in Publication 514 .
