I have some TD Bank stock and a portion of the quarterly dividend is paid as a foreign tax how do I

Clay McLaughlin

I have some TD Bank stock and a portion of the quarterly dividend is paid as a foreign tax, how do I properly record this portion in Quicken?

q_lurker

To be vague, it depends.

How is your brokerage handling those considerations?  They may be reporting to you the full dividend quarterly along with a second transaction as a foreign tax withheld..  Or they may be only showing that information at year end on 1099 forms (less likely for a stock, more likely for a mutual fund).  Or they may have some other way of passing that information to you.  

For the first case, you would enter the Div Income transaction, and then a second transaction as a MiscExp with the category assigned as Taxes:Foreign or some similar category.  You may need to create that category with what you deem to be a suitable tax line assignment.   

Tom Young

And for the second case - which is the most likely case - you should do a 12/31/XX entry based on the 1099-DIV information whereby you "gross up" the _DIV income by the amount of the foreign tax withheld, (there by increasing cash), and then expensing that cash with a MiscExp transaction that debits Taxes:Foreign, (there by leaving the cash in the Account unchanged.

Clay McLaughlin

Thank you both for your responses. When I create the second entry (Misc. expense) to account for the Foreign tax, I have a negative cash amount. Why is that?

q_lurker

Clay McLaughlin said:

Thank you both for your responses. When I create the second entry (Misc. expense) to account for the Foreign tax, I have a negative cash amount. Why is that?

What happened to the cash from the dividend?  In my first case, (example) the company has paid a $10 dividend, $1.50 has been withheld by the company as paid for foreign taxes, and your account netted $8.50.  Your broker would have (should have) reported both the $10 figure and the $1.50 figure.  (That example was assuming the foreign country requires the company to withhold and pay 15% as a tax on dividends paid.)

If as Tom Young suggests you are backfitting Quicken data to match 1099 data, only the $8.50 was previously reported to you and the $1.50 was late news to you, then you would add in an additional Div Income transaction for the extra $1.50.  That would bring your total dividends up in Quicken to match the total reported on the 1099 information and balance out the negative cash amount in your account.  

Clay McLaughlin

I got it, thank you both for your assistance with this!

craig.

I do an "Income" transaction for the fund, putting the amount of the foreign tax in the "Dividend" field and the negative of that amount in the "Miscellaneous" field.  This requires a category for the "Miscellaneous" amount, which I have labeled "Tax: Foreign".  Saving this transaction puts the "dividend" amount in the account's "Cash" column and generates a second Miscellaneous Expense transaction to record the tax paid and subtract the amount from my Cash column.  this keeps the Cash column accurate as well as properly reflecting the dividends and taxes on my year-end tax reports for my preparer.

In the Tax Reporting tab of the "Tax: Foreign" category, I checked that it is a tax related category, but left the tax line item blank since my tax preparer reports it on my 1040 as a credit and Quicken does not have a corresponding entry for that in its dropdowns.  As noted in another post, it could be labeled as "Schedule A: Other taxes" if handled as a Schedule A deduction.