I've received a form 1099-DIV from a US investment bank at which I hold some investments, with the following entries:

4- Federal Income Tax Withheld                            0.00
5- Section 199A Dividends                                 0.00
6- Investment Expenses                                    0.00
7- Foreign tax Paid                                      XX.XX
8- Foreign country or US Possession              United States

(I've obscured the exact amount in box 7, the point is it's not zero.) I'm confused as to how tax paid to "United States" would count as a foreign tax in this context. Every reference I can find about form 1099-DIV, including the IRS instructions for forms 1040 and schedules B and D (at least what I've read of them), seems to assume that the entity named in box 8 should be a non-US country or a US possession.

Is this a standard thing that happens sometimes, and if so does anyone know if it qualifies for a credit or deduction? Or is it unusual, perhaps enough so that it's likely to be a mistake on the form? For what it's worth, all my investments with this institution are listed on US exchanges (NYSE and NASDAQ) so it's not like I expected any tax to be paid to a foreign government.

The amount of money involved is not large, so I'm not in for any financial hardship if I get this wrong, but I'd like to try to be accurate.

  • Yes that's invalid and must be a mistake. And since the worst-case requirement for furnishing 1099-DIV (combined with -B plus 1-month for securities weirdness) was March 15, if you got this now that alone suggests incompetence or screwup on their part. Do you have investment(s) and more specifically did you during the year or in Jan. receive income which should have had foreign tax withheld? – dave_thompson_085 Apr 7 at 5:02
  • @dave_thompson_085 The first part of that looks more like an answer than a comment, doesn't it? But to answer your question: all my investments with this institution are in stocks and ETFs listed on US exchanges (NYSE and NASDAQ). I'd also note that the timing of this question is not indicative of when the form was sent to me; this is just when I decided to ask about it. – David Z Apr 7 at 7:08

You can claim a credit for (some of) the foreign tax shown in Box 7. See the instructions for Form 1116; the idea is that you list all your foreign income by country and compute the amount of credit you can claim. If certain conditions apply (mostly if the amount of foreign tax paid is small), you don't have to file Form 1116 separately, but can just claim the credit on Form 1040 Schedule 3.

The Tip on page 15 of the Form 1116 instructions states that you may aggregate all the foreign dividends paid from Regulated Investment Companies as though they came from a single country labelled "RIC". This is why, for income from Regulated Investment Companies, what's written in Box 8 of Form 1099-DIV doesn't matter. (JPMorgan Chase wrote "Various" in this box for me, for instance.)

  • Incidentally, the instructions for Form 1099-DIV state explicitly that RICs should leave Box 8 blank. It seems as though that instruction gets ignored .... – user106227 Apr 7 at 14:26

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