Foreign Taxes in Club Accounting 3

Companies often pay foreign taxes for you out of gross dividends (before your receipt of the net dividends) on shares you own. You need to enter two transactions to record this.

First, enter a Reinvested Dividend or Security Cash Dividend transaction for the net dividend amount your club actually received from the company. This is the total dividend (which may be listed on your broker statement as the gross amount) minus the foreign tax that the company previously paid out of it. This will give you the actual net amount deposited to your account. This figure may also be listed on your broker statement as the net amount.

Then, enter a Foreign Tax Paid by Co. transaction for the amount of the foreign tax (the amount deducted from the gross dividend) on the same date. Since it is already being recorded as a tax, you do not need to enter this figure as a negative. No amount entered here will change your account balances; this is recorded for tax entries at the end of the year.

Make certain that the foreign tax is dated the same as the dividend; the accounting system uses this information to match the foreign taxes to the dividends at the end of the year so that your tax forms will show the correct amount of dividends received during the year.


You own shares in a company that pays a cash dividend of $10. You received $9 in cash and $1 went to a Foreign Tax.
First, you enter a Cash Dividend transaction for $9. Then on the same date, you enter a Foreign Tax transaction for $1.
Remember, the Foreign Tax entry does not affect your club account balances.
The program saves this information so that if you use the 1065/K1 tax printer program, it will know what the gross amount of the dividend was so that it can be filled in on the supporting tax schedule.

Foreign Tax Refund

In the rare case of a Foreign Tax Refund, please enter it as a NEGATIVE foreign tax.