I have one mutual fund where cash dividends (there were no short gains this year) plus Box 7 (Foreign Tax Paid) is not equal to Box 1a (Ordinary Dividends). I have never seen such a thing before. Talked with the mutual fund company and they say it is correct. They claim in this case it includes and “interest adjustment” as well so that Box 1a = cash dividends and short term gains + foreign taxes + interest adjustment.

What exactly is this interest adjustment. I’d like to know for two reasons. One is an accounting one for my accounting program, and the other is tax and anything I should know about it for tax purposes.

Maybe I am just confused but if it appears as a Ordinary Dividend I would think it would it would either mean I get some value for it be it a pass through tax credit (like Foreign Tax paid), a basis change (like a reinvestment), or maybe something that has accrued (something earned but not yet paid). As it stands, it seems like I am paying tax on something I get no benefit from so it kind of blows my mind.

So I am confused. What is this thing. The fund is T. Rowe Price International Stock.

Thanks.