2020 Tax Reporting for Foreign Taxes Paid

Most investors can take a credit or a deduction for their share of foreign taxes paid by their mutual funds with significant non-U.S. holdings. Taking a credit usually is more advantageous, but to qualify you must have held your shares in a fund for at least 16 days of the 31-day period starting 15 days before the ex-dividend date of the fund. For additional information, refer to IRS Publication 514, Foreign Tax Credit for Individuals.

Tax Reporting for Foreign Taxes Paid Tables
Foreign Tax Deduction

If you wish to take a deduction instead of a credit:

  • For each fund that paid foreign taxes, report the amount from Box 7 of your Form 1099-DIV on Form 1040. You do not have to fill out Form 1116, Foreign Tax Credit (Individual, Estate, or Trust).

Foreign Tax Credit

If you wish to take a credit, you may use the simplified or standard method. You may use the simplified method if:

  • Your share of creditable foreign taxes from all sources is $300 or less (or $600 or less and you file a joint return with your spouse), and
  • All such income is passive. (All ordinary income from T. Rowe Price funds is passive.) 
Simplified Method

If you can use the simplified method, report the total foreign taxes paid shown in Box 7 of your Form 1099-DIV plus any other eligible foreign taxes on Form 1040.

Standard Method

If you cannot use the simplified method, you will be required to complete Form 1116 and attach it to your return. Form 1116 computes a limitation on the amount of the foreign tax credit you may deduct based on the total income received from foreign sources ("foreign source income") and total foreign taxes paid. Please note that you no longer have to report the income or taxes paid on a country-by-country basis on your federal income tax return.

Your total foreign taxes paid for Form 1116 is provided in Box 7 of your Form 1099-DIV and, together with the total of your taxes paid from other funds or sources, should be included on Form 1116, Part II, Line 8.

Your foreign source income for Form 1116, Part I, Line 1a should be calculated using one of two methods:

Method 1

Multiply the amount in Box 1a of your Form 1099-DIV by the "Foreign Source Income Percentage" in the tables that follow. You should use this method if:

  • Your income (excluding net capital gain and qualified dividend income) is taxed at or below the 24% income tax bracket, and

  • Your foreign qualified dividend income and foreign long-term capital gain from all sources is less than $20,000. Your foreign qualified dividend income for your T. Rowe Price fund can be calculated by multiplying the amount in Box 1a of your Form 1099-DIV by the "Foreign Source Qualified Dividend Percentage" in the tables that follow. Please note that no portion of your T. Rowe Price fund's distribution is foreign long-term capital gains.

You also should use this method if you determine that you cannot treat any portion of the foreign qualified dividend amount in Box 1b of your Form 1099-DIV as qualified dividends. (This would apply, for example, if you did not meet the holding period requirement to tax your fund dividends at the lower rates.)

Method 2

If you do not qualify to use Method 1, the IRS requires you to adjust the amount of foreign source income used to calculate your foreign tax credit because of foreign qualified dividends.

To calculate an adjusted foreign source income percentage, the “Foreign Source Income Percentage” is reduced by the “Foreign Source Income Qualified Dividend Percentage” multiplied by an adjustment factor. The adjustment factor is the difference between the highest marginal income tax rate and your lower qualified dividend tax rate, divided by the highest marginal income tax rate.

Once you have determined your adjusted foreign source income percentage, compute your foreign source income by multiplying the amount in Box 1a of your Form 1099-DIV by this adjusted percentage. This amount, together with the total of your adjusted foreign source income from other funds or sources, should be included on Form 1116, Part I, Line 1a.

Please consult your tax advisor for details.

International/Global Stock and Bond Funds

Ex-Dividend and Reinvestment Date: December 16, 2020

T. Rowe Price International/Global Stock and Bond Funds
  Foreign Source Income Percentage Foreign Source Qualified Dividend Percentage
International/Global Stock Funds
Africa & Middle East 49.73% 22.03%
Asia Opportunities 100.00% 100.00%
China Evolution Equity 23.39% 10.11%
Emerging Europe 100% 100.00%
Emerging Markets Stock 100.00% 78.81%
Emerging Markets Discovery Stock 68.01% 56.85%
European Stock 100.00% 100.00%
Global Industrials 34.75% 97.45%
International Disciplined Equity 61.77% 60.73%
International Discovery 47.99% 38.53%
International Equity Index 100.00% 100.00%
International Stock 100.00% 90.18%
International Value Equity 100.00% 92.93%
Japan 64.68% 63.80%
Latin America 100.00% 58.76%
New Asia 100.00% 85.30%
Overseas Stock 98.61% 89.32%
International/Global Bond Funds
Dynamic Global Bond 88.98% 0.00%
Emerging Markets Local Currency Bond 100.00% 0.00%
International Bond 100.00% 0.00%
International Bond (USD Hedged) 100.00% 0.00%
Retirement, Spectrum, and Target Funds

Ex-Dividend and Reinvestment Date: December 22, 2020

T. Rowe Price Retirement and Spectrum Funds
  Foreign Source Income Percentage Foreign Source Qualified Dividend Percentage
Retirement 2005 17.03% 7.88%
Retirement 2010 17.58% 8.87%
Retirement 2015 18.20% 10.09%
Retirement 2020 23.67% 14.33%
Retirement 2025 25.12% 16.82%
Retirement 2030 27.77% 20.09%
Retirement 2035 30.96% 23.72%
Retirement 2040 35.61% 28.92%
Retirement 2045 35.63% 30.16%
Retirement 2050 34.43% 29.18%
Retirement 2055 38.76% 32.86%
Retirement 2060 36.21% 30.92%
Retirement 2065 43.04% 38.71%
Retirement Balanced 16.47% 9.15%
Retirement Income 2020 11.39% 7.01%
Retirement I 2005 - I Class 18.48% 8.73%
Retirement I 2010 - I Class 17.48% 8.98%
Retirement I 2015 - I Class 19.03% 10.47%
Retirement I 2020 - I Class 20.90% 12.88%
Retirement I 2025 - I Class 22.59% 15.39%
Retirement I 2030 - I Class 24.66% 18.19%
Retirement I 2035 - I Class 26.78% 20.93%
Retirement I 2040 - I Class 28.01% 22.99%
Retirement I 2045 - I Class 33.00% 28.14%
Retirement I 2050 - I Class 32.93% 28.06%
Retirement I 2055 - I Class 34.41% 29.37%
Retirement I 2060 - I Class 34.77% 29.77%
Retirement I 2065 - I Class 34.29% 30.84%
Retirement Balanced I - I Class 16.65% 9.34%
Spectrum Diversified Equity1 11.98% 10.74%
Spectrum Income 14.37% 0.00%
Spectrum International Equity2 93.98% 85.96%
Target 2005 13.41% 5.96%
Target 2010 14.15% 6.52%
Target 2015 15.25% 7.10%
Target 2020 15.11% 7.94%
Target 2025 19.11% 11.65%
Target 2030 23.02% 15.10%
Target 2035 24.93% 17.22%
Target 2040 27.38% 19.80%
Target 2045 31.76% 24.61%
Target 2050 31.39% 25.33%
Target 2055 33.18% 27.70%
Target 2060 35.75% 30.62%
Target 2065 40.57% 36.48%

1Formerly Spectrum Growth.

2Formerly Spectrum International.

If a fund is not listed, it did not pass through a foreign tax credit.

Percentages are the same for all fund classes (Investor, Advisor, R, and I classes; Portfolio and Portfolio–II classes). For more information on Advisor, R, Institutional, and Portfolio funds, please visit our website for financial intermediaries at www.troweprice.com/financial-intermediary/us/en/investments/tax-center.html.

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