Question

Kyle, a single U.S. citizen taxpayer, paid foreign tax on investment income. Which of the following conditions would make him ineligible to claim the Foreign Tax Credit without filing Form 1116?

The amount of foreign tax Kyle paid is $405.

Kyle has signature authority over a foreign account that had an aggregate balance of more than $10,000 during the year.

Kyle received information about the amount of foreign income and foreign taxes paid on Form 1099-DIV.

The tax was paid on income generated from foreign investments held in a mutual fund Kyle owns.

Kayla and Ashton are U.S. citizens who file married filing jointly. In 2019, they received income from their foreign investments, from which $98 of foreign taxes were withheld. Although the couple has documentation regarding the income and the amount of taxes withheld, the information was not reported to them on a qualified payee statement. What steps can Kayla and Ashton take to avoid being taxed twice on their foreign income?

They must either file Form 1116, Foreign Tax Credit, or claim an itemized deduction for the foreign tax paid.

Their only option is to claim an itemized deduction for the Foreign Income Tax.

They may claim the Foreign Tax Credit directly on Schedule 3, Additional Credits and Payments, or claim an itemized deduction for the foreign tax paid.

None. They are not eligible to claim either the deduction for foreign taxes or the Foreign Tax Credit.

Andre and Alyssa are a married couple filing a joint return. Their total income for 2019 is $245,000, including $15,000 of dividend income. Assuming they have no other income or adjustments, what is their net investment income tax?

$0

$190

$570

$1,710

Answer 1

The correct answer is C i.e. $458

Accrued interest = 10,000 x 5% x 334/365 days

= $458

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