How do I categorize Fgn Div Tax: in my IRA?

mbienert

It's currently uncategorized and the notation is in the memo line. Thank you in advance for your consideration.

NotACPA

Pick, or create, any category that  you'd like.  Since the tax was paid from an IRA, you can't include it on your tax returns.

OR, if you know which security was involved, you can  show it as a reduction in the Div you received.

mbienert

So there's not a category for that? And, I don't know how to show it as a reduction in the div i received though I know which security it was. (don't judge me, I'm not dumb, just don't have an accounting background)

UKR

AFAIK, there isn't a category with a proper tax line item for Foreign taxes.

If this were in a regular investment account, you'd get a Form 1099 from the brokerage and you might need to report this on a separate Form 1116 for Foreign Taxes. Your tax software will guide you.

In my Quicken, I have always recorded this as Tax:Foreign taxes, with a Schedule A:Other Taxes line item. I know, I'm lying ... I just have to remember to separate this as I'm transferring my data to tax software for my regular investment account.
Transactions recorded in this category in my IRA account never show in tax reports or transfer to tax software because IRA accounts are not included in tax reports or transfer data.

I may misremember things, but there may even be (or have been) an Idea post floating around to add a Foreign Taxes tax line item to Quicken ...

jacobs

Perhaps I'm just ignorant of the implications of foreign tax paid in an IRA account, so can I ask: why does it matter? Any dividends/gains in an IRA account are non-taxable, because you pay taxes on the amounts you eventually withdraw from the account. So there's no tax deduction or credit for foreign taxes in an IRA account, because you can't get a deduction or credit from dividends you aren't being taxed on. (For this reason, I've thought that holding foreign stocks are somewhat disadvantageous in a tax-deferred account, because foreign taxes are taken out of your dividends but you don't get a tax credit to get that money back as you would in a taxable account). 

mbienert

Wow, that is incredibly useful information to have. I’m afraid I am the ignorant one here. Hence the question perhaps. You raise excellent points. I think I will just post it as a journal entry? It’s really just my OCD wanting everything to be just so. Sounds like at the end of the day it doesn’t really matter, only to me. In any case, thank you again for your help and your insights. They’re very useful.

Regentrude

Other then a margin expense (which I use as a crutch), there is not expense one can use in an IRA.
Even my 401k account has a MiscExpense, where I can record Foreign Taxes or ADR fees.
And yes it matters. May be I should replace some of the investments where I pay foreign taxes with something else more efficient. Unless I have the numbers, I can't make an informed decision.