How do I report foreign tax paid on Tax Schedule?

I can't figure out what Tax category to use for US withholding taxes on my US dividends so they will appear in the Tax Schedule Reports.

Did Q omit this?

Answers

  • NotACPANotACPA SuperUser
    I have stocks that pay divs in a foreign currency (Euros).
    I record the full USD amount of the Euros received and then reinvest the amount available AFTER the foreign taxes are paid ... leaving the foreign tax in the account.
    Lastly, I do a Withdraw transaction to a "Foreign Tax Paid" category that I created.  I assigned that category to  "Schedule A: Other taxes".
    You MUST assign a Tax Line to the category for it to show on a Tax report.


    Q user since DOS version 5
    Now running Quicken Windows Subscription
    Retired "Certified Information Systems Auditor"
  • Thanks for explaining your approach.
    I do a similar process, except I call it "withholding tax", an expense category.  

    My actual question was for the Canadian version of QM to find out whether Quicken had included the "Foreign Tax Paid" line from the Tax form.  I couldn't find it.  I'm guessing from your response that it is likely omitted on the Canadian one as well. I will look for a generic Tax schedule equivalent to your "other taxes" on the Canadian form if no-one else responds to tell me which Canadian Tax category is the appropriate one.

    Thanks. 
  • ClaudeClaude Member
    edited May 14
    If one is a U.S resident, Foreign tax is withheld by foreign financial institutions on dividends not originating in the U.S.   For example if you were a U.S. resident and held a foreign financial account in Canada in which you owned stock of Suncor (a Canadian resident  company) and Alphabet ( a U.S. resident company), the foreign financial institution wiould withhold Canadian Tax on dividend payments to your foreign account from Suncor but not on those from Alphabet. 
    Such payments can then be claimed on your U.S tax return either as a credit (form 1116 or as a deduction (Schedule B ).  The fiscal treatment of "Foreign tax Paid" is complex and I would think beyond the scope of Quicken.

    Furthermore, the multi-currency feature in Quicken does not keep track of the foreign exchange rate that applied to a past transcation, only the current available rate.

    Your best alternative may be to use TurboTax as a parallel process.  You will need to familiarize yourself with IRS form 1116 and the related Publication 514.  

    Good luck.
  • "The fiscal treatment of "Foreign tax Paid" is complex and I would think beyond the scope of Quicken".  Thank you for trying to help.  But I am not concerned about how withholding is treated fiscally. The issue is that in QM we are forced to use the TAX schedule Report for our reporting because there is really no useful reports feature available for our Investments. While it shows our dividends, the Tax Schedule reporting also needs to show the withholding tax.  I wanted to know what line to use on CANADIAN to use, because Q has omitted it. You have referred me to IRS forms - but I am Canadian. 
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