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Form 1116 Line 3b
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Hank Youngerman
Feb 9, 2012, 2:34:00 PM2/9/12
to
Hope I'm not driving anyone mad with my slogging through this form...
but I am learning a lot.
Line 3b of Form 1116 pertains to "Deductions that do not relate to any
specific type of income." "Type of income" means, whether it is
foreign source or not.
I contributed $4,150 last year to a self-employed 401(k) plan. The
income related to this was "definitely" sourced in the USA, as it was
from my one-man consulting business, located entirely in the USA.
Turbotax puts this $4,150 on Line 3b. I think that it doesn't belong
there, since the deduction can be sourced to specific income. Am I
right?
I'm discovering that Form 1116 seems to have a lot of weird effects.
For example, given that I'm in the 28% bracket and not affected by any
funny stuff like deduction/exemption phaseouts, AMT, passive loss
limits, etc., I would expect a $4,150 retirement plan contribution to
reduce my tax by 28% of $4,140. In fact, the difference is more like
17%. OTOH, a quick estimate pertaining to dividends (I don't actually
have all my 1099's yet) suggested a marginal rate on dividends of
about 11.2%, rather than 15%.
--
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
but I am learning a lot.
Line 3b of Form 1116 pertains to "Deductions that do not relate to any
specific type of income." "Type of income" means, whether it is
foreign source or not.
I contributed $4,150 last year to a self-employed 401(k) plan. The
income related to this was "definitely" sourced in the USA, as it was
from my one-man consulting business, located entirely in the USA.
Turbotax puts this $4,150 on Line 3b. I think that it doesn't belong
there, since the deduction can be sourced to specific income. Am I
right?
I'm discovering that Form 1116 seems to have a lot of weird effects.
For example, given that I'm in the 28% bracket and not affected by any
funny stuff like deduction/exemption phaseouts, AMT, passive loss
limits, etc., I would expect a $4,150 retirement plan contribution to
reduce my tax by 28% of $4,140. In fact, the difference is more like
17%. OTOH, a quick estimate pertaining to dividends (I don't actually
have all my 1099's yet) suggested a marginal rate on dividends of
about 11.2%, rather than 15%.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Andre Gold
Mar 20, 2012, 8:33:56 PM3/20/12
to
On Feb 9, 2:34 pm, Hank Youngerman <dontspa...@redtopbg.com> wrote:
> Hope I'm not driving anyone mad with my slogging through this form...
> but I am learning a lot.
>
> Line 3b of Form 1116 pertains to "Deductions that do not relate to any
> specific type of income." "Type of income" means, whether it is
> foreign source or not.
>
> I contributed $4,150 last year to a self-employed 401(k) plan. The
> income related to this was "definitely" sourced in the USA, as it was
> from my one-man consulting business, located entirely in the USA.
>
> Turbotax puts this $4,150 on Line 3b. I think that it doesn't belong
> there, since the deduction can be sourced to specific income. Am I
> right?
>
> I'm discovering that Form 1116 seems to have a lot of weird effects.
> For example, given that I'm in the 28% bracket and not affected by any
> funny stuff like deduction/exemption phaseouts, AMT, passive loss
> limits, etc., I would expect a $4,150 retirement plan contribution to
> reduce my tax by 28% of $4,140. In fact, the difference is more like
> 17%. OTOH, a quick estimate pertaining to dividends (I don't actually
> have all my 1099's yet) suggested a marginal rate on dividends of
> about 11.2%, rather than 15%.
When you get the answer do let me know. I have the exact same issue
> Hope I'm not driving anyone mad with my slogging through this form...
> but I am learning a lot.
>
> Line 3b of Form 1116 pertains to "Deductions that do not relate to any
> specific type of income." "Type of income" means, whether it is
> foreign source or not.
>
> I contributed $4,150 last year to a self-employed 401(k) plan. The
> income related to this was "definitely" sourced in the USA, as it was
> from my one-man consulting business, located entirely in the USA.
>
> Turbotax puts this $4,150 on Line 3b. I think that it doesn't belong
> there, since the deduction can be sourced to specific income. Am I
> right?
>
> I'm discovering that Form 1116 seems to have a lot of weird effects.
> For example, given that I'm in the 28% bracket and not affected by any
> funny stuff like deduction/exemption phaseouts, AMT, passive loss
> limits, etc., I would expect a $4,150 retirement plan contribution to
> reduce my tax by 28% of $4,140. In fact, the difference is more like
> 17%. OTOH, a quick estimate pertaining to dividends (I don't actually
> have all my 1099's yet) suggested a marginal rate on dividends of
> about 11.2%, rather than 15%.
on line 3b. (1/2 Soc Sec Tax, contribution to IRA, and self employed
Health Insurance which is reported as income)
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