Personal Finance (Not Investing) • Re: Tax Question - Foreign Tax Credit

Agreed but I am talking about the converse: a taxpayer is far more likely to have their first encounter with adjusting Form 1116, line 1a because of the 32% or higher tax bracket qualification and not the $20,000 foreign source qualified dividend one. But the $20,000 gets mentioned more often on the forum for some reason.

As long as your qdivs >= taxable.income you may not need to adjust fqdivs even if they exceed 20k. It's in the 1116 instructions viewtopic.php?p=8130124

You can have ~$1mil in foreign ETFs, >20k fqdiv, and not be in the 32% bracket, and not need to adjust fqdivs on 1116.

I remember that thread (viewtopic.php?t=443463) and IMO it's a niche edge case. It wouldn't normally make sense to forego the standard deduction by having such little ordinary income that the standard deduction starts wiping out qualified dividends and long-term capital gains. It only appeared to be because of the premium tax credit; otherwise it would make little sense to forego a Roth conversion in that situation.

Statistics: Posted by Makefile — Tue Feb 18, 2025 8:56 pm

---