The American Funds listed in the Foreign Income Worksheet and Foreign Qualified Dividend Income Worksheet distributed foreign taxes on earnings from investments outside the United States. The foreign taxes distributed by these funds are reported on your Form 1099-DIV, and you may claim a foreign tax credit or deduction for your share of the foreign taxes distributed.
You may claim a foreign tax credit or take an itemized deduction for your share of the foreign taxes distributed by a qualifying fund. However, you will usually receive more benefit by claiming a tax credit.
For more information about the IRS requirements to claim a foreign tax credit, refer to IRS Publication 514, Foreign Tax Credit for Individuals. (To order, call (800) 829-3676 or download from the IRS website.)
Note: If you can claim a foreign tax credit directly on Form 1040, you do not need to complete the Foreign Income or Foreign Qualified Dividend Income Worksheet.
If you are an individual taxpayer and you meet all of the requirements to claim a foreign tax credit, you can claim the credit directly on IRS Form 1040 if all of the following apply:
If one or more of these do not apply, you must complete the Foreign Income Worksheet and the Foreign Qualified Dividend Income Worksheet. The information from these worksheets should be reported on IRS Form 1116 (Form 1118 for corporations). Enter “RIC” as the name of foreign country or U.S. possession when the income is received from a mutual fund.
The Foreign Tax Paid can be obtained from either the Foreign Tax Paid amounts shown in the Year-to-Date Transaction History section of your year-end statement for all share classes you own or from Box 6 of Form 1099-DIV (individuals only).
To claim a foreign tax credit, corporations should complete IRS Form 1118 using the Foreign Income Worksheet. Corporations do not need to complete the Foreign Qualified Dividend Income Worksheet, because corporations are not eligible to receive qualified dividend income.
Generally includes mutual fund income, dividends, interest, royalties, rents, annuities, gains from the sale of non-income-producing investment property, gains from commodities transactions and, generally, capital gains not related to the active conduct of a trade or business.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.