You may be able to reduce your 2009 income taxes in connection with foreign income tax paid by the following funds:
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Delaware Emerging Markets Fund
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Delaware International Value Equity Fund
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Delaware Global Value Fund
For the calendar year 2009, Delaware Emerging Markets Fund, Delaware International Value Equity Fund, and Delaware Global Value 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 2009 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 Delaware Emerging Markets Fund, Delaware International Value Equity Fund, or Delaware Global Value Fund (any class) in a taxable account in 2009.
Management strives to reclaim foreign taxes withheld in countries where it invests. However, some countries limit or do not allow reclaims by the Fund. Taxes that are withheld and cannot be reclaimed are considered paid by the Fund. Your proportionate amount of foreign taxes paid appears on line 6 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.
Receiving a tax credit
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If the total amount of your foreign tax paid on IRS Form 1099-DIV is $300 or more ($600 or more 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.
Note: If you claim a foreign tax credit on your share of the foreign taxes paid by a mutual fund, you no longer have to report the income or taxes paid on a country-by-country basis on Form 1116. Country-by-country reporting is no longer required of mutual funds or other regulated investment company shareholders. The instructions to Form 1116 provide the details for proper reporting.
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If the total amount of your foreign tax paid on IRS Form 1099-DIV is less than $300 (less than $600 if married filing jointly) and you meet certain other requirements, you can claim the foreign tax credit on line 47 of 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.
Claiming foreign tax payments as a deduction
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.
The information contained in the Tax Center is not intended to be legal or tax advice. If you need assistance preparing your tax return, please consult a tax advisor.
Information may be abridged and therefore incomplete. Any discussion pertaining to taxes in this communication (including attachments) may be part of the promotion or marketing of a product. As provided for in government regulations, advice (if any) related to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. Individuals should seek advice based on their own particular circumstances from an independent tax advisor.
Investors should consider the investment objectives, risks and charges and expenses of a Fund carefully before investing. Each Fund's prospectus contains this and other important information about the Fund. Please request a prospectus by calling 800 523-1918 or by visiting the prospectuses & shareholder reports section of www.delawareinvestments.com. Read it carefully before investing or sending money.
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