That sheds some new light on the US verses foreign source income. However, I don't think that this is an issue that we as the shareholders of a US mutual fund have to sort out. The mutual fund company sorts it out. Looking at my consolidated 1099 from Vanguard this year I find in the Mutual Fund and UIT Supplemental Information section for Total International that 81.96% of the total income from that fund is foreign source income. From the Detail for Dividends and Distributions section I find that the Total Dividends & distributions from this fund is X amount. Thus, my foreign source income from whatever qualifies as foreign source income is 81.96% of X.
If you don't qualify for "adjustment exception" then
adjust your foreign source qualified dividends or capital gain distributions, multiply your foreign source qualified dividends or capital gain distributions in each separate category by 0.4054 if the foreign source qualified dividends or capital gain distributions are taxed at a rate of 15%, and by 0.5405 if they are taxed at a 20% rate. Include the results on line 1a of the applicable Form 1116. You adjust your foreign source qualified dividends or capital gain distributions taxed at the 0% rate by not including them on line 1a.
This is from page 9 of the instructions. Looks like just straight multiplication. What am I missing?
my understanding is that while dividends count as foreign income, capital gain distributions do not.
Don't think that is so. On page 6 of the instructions under Categories of Income c. Passive Income it says,
Capital gains not related to the active conduct of a trade or business are also generally passive income.
I've been filing an 1116 for years and don't find it all that complicated. I will caveat that statement that the fact that all my foreign holdings are mutual funds.
Investing Tax-free and qualified funds in foreign markets would incur double-taxation.
This appears to be incorrect for tax-free accounts. If your investments in foreign markets are held in a tax-free account, such as a Roth IRA, your foreign income will be subject to foreign taxes, and you will get no US tax credit. However, if you withdraw that foreign income from your Roth it will be tax free. Thus, you do avoid US taxes but not the foreign taxes.I agree that foreign income in a qualified account (traditional IRA) would be subject to double income taxation.Given the above, I keep most of my Vanguard Total International Fund holdings in my regular brokerage account and the rest in my Roth.
Perhaps you are confusing deductible with out-of-pocket maximum? We have a high-deductible plan and the family deductible is $4,000 while the family out of pocket maximum is $10,000
Perhaps you are not familiar with Article 1, Section 8, Clause 5 in which it is very clear that the power to coin money and regulate the value thereof is vested in Congress. Congress created the Federal Reserve to execute these powers for them. So, is the Fed legislative? I'm sure that the USSC will be addressing this question very soon!
Perhaps you should revisit you decision to go to "the best school that would accept them," whatever that means. There is nothing wrong with balancing the desire for prestige you might acquire from the school you go to and your financial reality. What really matters when going to college is that you actually get your degree and that this degree provides you with a marketable set of skills. Ten years after you graduate the school name on your diploma really won't matter.
Don't forget the qualified dividends. You are much more likely to have some of those than capital gains if one is a long-term investor and has assets in non-tax advantaged accounts. For those in the 12% bracket they are often tax free. If you max out the bracket with your Roth conversion they won't be.
Those numbers look good. I would encourage you to look at three complicating incomes that are common for couples 65+. Those are social security, qualified dividends and long-term capital gains. Doing so can greatly change the effective income tax rate on your Roth conversions. Like from 12% to 32%.
Their value [fiat currencies] depends entirely upon the collective trust of people making transactions in those currencies. If that confidence evaporates, so does the value of that money.
You can't eat or drink gold. It doesn't protect you from the weather. Other than for some small industrial uses and to make jewelry, gold itself is worthless until you can get someone to trade something useful, like food or drink for your gold. My point is that just like fiat currencies gold's value is based mostly upon the collective trust that other people will make transactions with you for things of real value like food, drink, shelter, clothes and so on. That's a fundamental characteristic of all currencies.
Comments
That sheds some new light on the US verses foreign source income. However, I don't think that this is an issue that we as the shareholders of a US mutual fund have to sort out. The mutual fund company sorts it out. Looking at my consolidated 1099 from Vanguard this year I find in the Mutual Fund and UIT Supplemental Information section for Total International that 81.96% of the total income from that fund is foreign source income. From the Detail for Dividends and Distributions section I find that the Total Dividends & distributions from this fund is X amount. Thus, my foreign source income from whatever qualifies as foreign source income is 81.96% of X.
Post: Taxes on foreign stocks
Link to comment from February 21, 2026
If you don't qualify for "adjustment exception" then
This is from page 9 of the instructions. Looks like just straight multiplication. What am I missing? Don't think that is so. On page 6 of the instructions under Categories of Income c. Passive Income it says,Post: Taxes on foreign stocks
Link to comment from February 20, 2026
I've been filing an 1116 for years and don't find it all that complicated. I will caveat that statement that the fact that all my foreign holdings are mutual funds.
Post: Taxes on foreign stocks
Link to comment from February 19, 2026
Post: Taxes on foreign stocks
Link to comment from February 19, 2026
Perhaps you are confusing deductible with out-of-pocket maximum? We have a high-deductible plan and the family deductible is $4,000 while the family out of pocket maximum is $10,000
Post: Affordable is an interesting word – especially related to healthcare
Link to comment from December 18, 2025
Perhaps you are not familiar with Article 1, Section 8, Clause 5 in which it is very clear that the power to coin money and regulate the value thereof is vested in Congress. Congress created the Federal Reserve to execute these powers for them. So, is the Fed legislative? I'm sure that the USSC will be addressing this question very soon!
Post: Interest Rates Battle
Link to comment from December 14, 2025
Perhaps you should revisit you decision to go to "the best school that would accept them," whatever that means. There is nothing wrong with balancing the desire for prestige you might acquire from the school you go to and your financial reality. What really matters when going to college is that you actually get your degree and that this degree provides you with a marketable set of skills. Ten years after you graduate the school name on your diploma really won't matter.
Post: $92,000 a year is quite an investment. The ROI is real, but maybe not.
Link to comment from December 11, 2025
Don't forget the qualified dividends. You are much more likely to have some of those than capital gains if one is a long-term investor and has assets in non-tax advantaged accounts. For those in the 12% bracket they are often tax free. If you max out the bracket with your Roth conversion they won't be.
Post: Calculating the Maximum Income While Staying in the 12% Tax Bracket
Link to comment from December 7, 2025
Those numbers look good. I would encourage you to look at three complicating incomes that are common for couples 65+. Those are social security, qualified dividends and long-term capital gains. Doing so can greatly change the effective income tax rate on your Roth conversions. Like from 12% to 32%.
Post: Calculating the Maximum Income While Staying in the 12% Tax Bracket
Link to comment from December 7, 2025
Post: Inflation Insurance
Link to comment from November 24, 2025