Another option you might not have considered: look into foreign preferred shares or certain types of ADRs that pay higher dividends than common shares. They sometimes have significantly higher yields than regular dividend stocks. Also, have you looked into foreign royalty trusts? Some Canadian and Australian royalty trusts focus on natural resources and pay significant distributions that are considered passive income. I'd be careful with directly buying on foreign exchanges though - the forex fees and extra paperwork might eat into your gains. Sometimes you can get similar exposure through US-listed securities that still qualify as foreign source income.

Great discussion here! I've been dealing with foreign tax credit carryovers myself and wanted to add a few insights from my experience. One strategy that's worked well for me is focusing on foreign government bonds or sovereign debt funds. Many developed countries' government bonds are available through US brokers and generate foreign source interest income that clearly falls under the passive category. The yields might be lower than stocks, but it's predictable foreign passive income. Also, regarding your question about creative strategies - have you considered foreign closed-end funds trading at discounts? When they distribute capital gains or dividends, those are typically foreign source. Plus, if you buy at a discount and the discount narrows, you get additional capital appreciation. One word of caution based on my mistakes: keep meticulous records of your foreign transactions, especially the dates and exchange rates. The IRS gets very particular about the currency conversion calculations on Form 1116, and having clear documentation saved me during an audit a few years back. The 10-year carryover window does create urgency, but don't let it push you into investments you're not comfortable with. Foreign passive income is great, but not at the expense of sound investment principles!

Has anyone managed to figure out how to handle the carryover of excess foreign tax credits on Form 1116? I have more foreign tax paid than I can claim this year, and I'm totally confused about how to track this for future years.

I went through this exact same situation last year with foreign dividends and capital gains. Here's what I learned after making some mistakes initially: For your $15,200 in dividend income with $3,700 in foreign taxes withheld - that's straightforward passive income for Form 1116. Make sure you have all your 1099-DIV forms and any foreign tax documents. Regarding your $22,000 capital gains question - this is where it gets tricky. Since you're a US resident making investment decisions from the US, those gains are almost certainly US-source income, even though the stocks are foreign companies. This means they WON'T increase your foreign income on Form 1116, so they won't help you claim more of your paid foreign taxes. The key insight is that the IRS looks at where the economic activity (your investment decisions) occurred, not where the company is headquartered. I initially made the mistake of thinking all my foreign stock gains were foreign-source income and had to file an amended return. One tip: if you paid foreign taxes on those capital gains (which is rare but can happen), that might change the sourcing rules. But in most cases with foreign stocks, you're only dealing with dividend withholding taxes, not capital gains taxes from the foreign country. The good news is your dividend situation alone should give you a decent foreign tax credit. Just make sure to use the correct exchange rates from the IRS website for converting everything to USD.

I use TurboTax and it lets you override the cost basis that's reported on the 1099-B. There's a specific section where you can enter the adjusted cost basis and it even asks why you're making the change. Makes it pretty straightforward.

This is a really common issue that trips up a lot of people! The key thing to understand is that the supplemental information typically contains the most accurate cost basis after all adjustments have been made. Your broker might have made adjustments for things like wash sales, dividend reinvestments, or corporate actions that occurred after they initially reported to the IRS. In your case, you should use the $6,325 from the supplemental information. I know it seems counterintuitive to use a number that results in a higher tax bill, but using the correct adjusted basis is what the IRS expects. The difference could be due to wash sales if you bought and sold similar securities within 30 days of each other. When you file, most tax software will have an option to indicate that you're using an adjusted cost basis that differs from Box 1e. Just keep all your 1099-B documents and supplemental materials in case you need to reference them later. The IRS understands these adjustments happen and it's a normal part of investment tax reporting.

Anybody know if they work with amended returns?

I've been using Bank Mobile for about 3 years now and honestly it's been pretty reliable for my refunds. The key is to read the fine print - they do have fees but if you stick to their basic direct deposit option (not the instant transfer), it's usually free. Takes about the same time as any other bank, maybe 1-2 business days once the IRS releases it. Just avoid their "rapid refund" upsells - that's where they get you with the fees.

Emma, what an incredible win - congratulations! I totally understand the mix of excitement and panic you're feeling right now. The tax situation is definitely something to plan for carefully, but please don't let it scare you away from this amazing opportunity. Here's something that might help put things in perspective: even if you end up in the worst-case tax scenario (around 35-40% combined federal and California state taxes), you're still looking at keeping a $35,000+ asset that you received completely free. That's an absolutely life-changing windfall! I'd recommend taking a systematic approach: First, get the exact fair market value the sweepstakes company will report on your 1099-MISC - sometimes this is lower than initial estimates. Then get quotes from multiple Audi dealers to understand your realistic sale price options. This gives you concrete numbers to work with instead of just worrying about hypotheticals. One strategy to consider: you could accept the car, immediately get pre-approved for an auto loan using the vehicle as collateral (maybe 60-70% of its value), which would give you cash on hand to cover the taxes while keeping your options open about whether to keep or sell the car later. Remember, the tax payment isn't due until you file next April, so you have months to plan and save. Don't walk away from this incredible prize - with proper planning, this should be one of the best financial things that's ever happened to you!

Emma, congratulations on your amazing win! As someone who's dealt with complex tax situations, I want to offer some reassurance and practical advice. First, take a deep breath - you're not alone in feeling overwhelmed by this. The good news is that even after taxes, you're looking at a substantial financial benefit. Here's what I'd suggest: 1. **Get exact documentation** - Contact the sweepstakes company to confirm the precise fair market value they'll report on your 1099-MISC. Sometimes this differs from initial estimates. 2. **Research your options early** - Get quotes from multiple Audi dealers now to understand your realistic sale price. This gives you a baseline for planning. 3. **Consider the auto loan strategy** - You could get a loan against the car for 60-70% of its value, giving you immediate cash to cover taxes while keeping your options open about whether to keep or sell. 4. **Don't forget about timing** - Your taxes aren't due until you file next April, so you have months to plan. However, with a prize this large, you'll likely need to make estimated quarterly payments to avoid penalties. The most important thing: don't walk away from this opportunity! Even in a high-tax state like California, you're still looking at keeping a $30k+ asset that you got for free. With proper planning, this should be one of the best financial events of your life, not a burden. You've got this - just take it one step at a time!