For the calendar year 2021, Optimum International Fund paid foreign income taxes on a percentage of the dividend and interest income earned on investments in several countries. You may be able to use these foreign taxes to take either a tax credit (provided you have met the minimum holding period requirements*), or a deduction on your 2021 federal income tax return. This may allow you to reduce or eliminate any double taxation on your foreign earnings. This tax benefit is an option only if you held shares of Optimum International Fund (any class) in a taxable account in 2021.
Management strives to reclaim foreign taxes withheld in countries where it invests. However, some countries limit or do not allow reclaims by a fund. Taxes that are withheld and cannot be reclaimed are considered paid by a fund. Your proportionate amount of foreign taxes paid appears on line 7 of Form 1099-DIV (foreign taxes are reported in the "foreign tax paid" column and also included in the "total ordinary dividends" column).
* Must have held shares in the Fund for at least 16 days during the 31-day period beginning on the date that is 15 days before the date on which such share becomes ex-dividend with respect to such dividend to be entitled to the foreign tax credit.
If the total amount of your foreign tax paid on IRS Forms 1099-DIV or certain other payee statements is more than $300 (more than $600 if married and filing jointly) and you wish to receive a tax credit, please use the information on Form 1099-DIV to determine your foreign tax paid and foreign source income. You will need to disclose this information on Form 1116. Corporations should use IRS Form 1118.
If the total amount of your foreign tax paid on IRS Forms 1099-DIV or certain other payee statements is $300 or less ($600 or less if married filing jointly) and you meet certain other requirements, you can claim the foreign tax credit on Schedule 3 (Form 1040), without filing IRS Form 1116. Please consult your tax advisor or read the instructions included with IRS Form 1040 and IRS Form 1116 to see if you qualify.
If you wish to claim the taxes paid as a deduction, rather than a credit, simply list the total foreign taxes paid with other itemized deductions on Schedule A of your individual income tax return.
Please consult your tax advisor to help you determine whether a tax credit or deduction is more advantageous to your personal situation and for help completing the appropriate IRS forms and/or schedules. Tax forms and schedules can be obtained directly from the IRS.
Investing involves risk, including the possible loss of principal.