Foreign Income

[adjusterjack]

I received my 1099 from the online broker and saw this:



This was a dividend paid by an ETF called PICK which holds foreign investments.

It looks like the tax has been withheld and paid.

What do I do with it?

 

[Redemptionman]

You need to report it as other income, iirc

I report everything regardless of how small it is, if I get a form I report it. Less chance of an audit

 

[adjusterjack]

You need to report it as other income, iirc

I figured that.

Guess I should have been clearer and asked where and how.

 

[Redemptionman]

Is it a 1099-DIV?

You report it as dividend income, we use tax act but whatever program you use should be able to handle it.

 

[Tax Counsel]

You need to report it as other income, iirc

I report everything regardless of how small it is, if I get a form I report it. Less chance of an audit

You are required to report all your gross income (as defined in the IRC), not just what third parties report to the IRS. If you are only reporting income reported on a W-2 or 1099 and leaving off other income, you are subject to civil and/or criminal penalties. If what you meant is that you don't report that dime you found on the sidewalk as income because it's just too small to make any difference, then I see no problem with that. But if you mean avoiding reporting any income regardless of amount if it's not reported to the IRS, I do see a big problem with that.

 

[Tax Counsel]

I received my 1099 from the online broker and saw this:

View attachment 4176

This was a dividend paid by an ETF called PICK which holds foreign investments.

It looks like the tax has been withheld and paid.

What do I do with it?

Are you planning to claim the foreign tax credit for that, or deduct the foreign tax withheld, or just forget about the few bucks that would save and not bother with pursuing the foreign tax issue? The answer to that would affect how I would answer how to report it.

 

[Redemptionman]

You are required to report all your gross income (as defined in the IRC), not just what third parties report to the IRS. If you are only reporting income reported on a W-2 or 1099 and leaving off other income, you are subject to civil and/or criminal penalties. If what you meant is that you don't report that dime you found on the sidewalk as income because it's just too small to make any difference, then I see no problem with that. But if you mean avoiding reporting any income regardless of amount if it's not reported to the IRS, I do see a big problem with that.

Okay, Kojak. You do not have to report most personal injury settlements, sale of vehicles when it is used to purchase another vehicle or in most cases church income is not taxable so evidently you do not have to report it all.

 

[Zigner]

Okay, Kojak. You do not have to report most personal injury settlements, sale of vehicles when it is used to purchase another vehicle or in most cases church income is not taxable so evidently you do not have to report it all.

RIF.
The statement was that one must report all "...gross income (as defined in the IRC)..."
(emphasis added)

 

[adjusterjack]

Are you planning to claim the foreign tax credit for that, or deduct the foreign tax withheld, or just forget about the few bucks that would save and not bother with pursuing the foreign tax issue? The answer to that would affect how I would answer how to report it.

I'll include the dividend in my taxable income but I would prefer to ignore the foreign tax credit as my taxable income for 2022 is less than the standard deduction. The $14 isn't going to make any difference.

 

[adjusterjack]

You do not have to report sale of vehicles when it is used to purchase another vehicle

Citation please.

Cause I think you are wrong.

 

[Redemptionman]

Citation please.

Cause I think you are wrong.

most vehicles depreciate and don't appreciate so if you sold it for a lost then you do not have to report it, if you sold it for a profit then it is capital gains. Most everyone will sell a vehicle for less money than they paid for it. I guess I needed to qualify the statement.

 

[army judge]

What do I do with it?

Tempting, mate, but I'll restrain my naughty impulses. LOL

 

[army judge]

Citation please.

Cause I think you are wrong.

Selling a Used Car for Less Than You've Invested in It
The vast majority of people who find themselves selling a vehicle are selling it for less than they have invested in it. This is almost always the case when you bought a new or used car and are selling it down the road, since cars typically depreciate over time. If you're selling a car for less than you paid for it, you will not have to pay capital gains taxes on it. This is because you did not actually generate any income from the sale of the vehicle.

Keep in mind that you have to add the money that you invested in the vehicle after the purchase to the amount that you originally purchased the vehicle for. If the amount that you sell a vehicle for is less than what you have invested in the vehicle, including the original purchase price you paid and the costs of any improvements, you will not have to pay taxes even if you sell it for a little more than what you paid for it.

For example, recalling our earlier example, let's say that you sell a car for $4,000 after buying it for $1,000, but this time, you invested $3,500 into the car after purchasing it. That means your total investment in the vehicle is $4,500 – $500 more than what you sold it for – so you won't need to pay a capital gains tax on the sale.

You Don't Have to Put the Transaction on Your Tax Return If You Lost Money
If you take a loss, not only do you not have to pay taxes when you sell a car, but you also don't even have to put the transaction on your tax return. You don't have to report this because losing money when you sell a personal car is not tax-deductible. This may sound unfortunate, but it does save you some paperwork when it comes time for you to do your taxes. However, you will have to put the information on your tax return if you make a profit on the car because the IRS considers this a capital gain.

What to know about taxes when you sell a vehicle, updated for 2023
...

 

[adjusterjack]

most vehicles depreciate and don't appreciate so if you sold it for a lost then you do not have to report it, if you sold it for a profit then it is capital gains. Most everyone will sell a vehicle for less money than they paid for it.

I guess I needed to qualify the statement.

Yes.

I did sell a car for a profit last year and I'm declaring my capital gains on my return.

It's a pity you can't take a capital loss deduction when you sell a car for less than you paid for it.

 

[Redemptionman]

Yes.

I did sell a car for a profit last year and I'm declaring my capital gains on my return.

It's a pity you can't take a capital loss deduction when you sell a car for less than you paid for it.

This is true, especially now a days. Almost all new vehicles are selling for MSRP.

 

[Redemptionman]

Yes.

I did sell a car for a profit last year and I'm declaring my capital gains on my return.

It's a pity you can't take a capital loss deduction when you sell a car for less than you paid for it.

This is true, especially now a days. Almost all new vehicles are selling for MSRP.

 

[Tax Counsel]

I'll include the dividend in my taxable income but I would prefer to ignore the foreign tax credit as my taxable income for 2022 is less than the standard deduction. The $14 isn't going to make any difference.

Then in that case just report it like any other dividend. You won't need to do anything about the foreign tax that was paid if you aren't going to claim any deduction or credit for it. Dividends paid by a foreign corporation are taxed to U.S. citizens/residents the same way they are taxed on dividends from U.S. corporations.

 

[Tax Counsel]

Yes.

I did sell a car for a profit last year and I'm declaring my capital gains on my return.

Yep, the used car market last year was insane. A lot more people have taxable gains on their used vehicles for last year than would usually be the case.

 

[adjusterjack]

Then in that case just report it like any other dividend. You won't need to do anything about the foreign tax that was paid if you aren't going to claim any deduction or credit for it. Dividends paid by a foreign corporation are taxed to U.S. citizens/residents the same way they are taxed on dividends from U.S. corporations.

Very helpful. Thanks.