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Foreign Tax Credit Questions
What is foreign tax credit?
credit is a credit of the tax that is paid to foreign countries. This credit is non-refundable. Any individual who has worked in a foreign country or earns an income from an investment in a foreign country may claim this credit. Given below are some important questions about foreign tax credit that are answered by Experts.
Does the state of New York have foreign tax credit?
New York State has a foreign tax credit. It is an itemized
that will reduce the total taxable amount for an individual.
How can a person claim foreign tax credit?
An individual may claim foreign tax credit by filing form 1116. The form may be found at
What is a simplified foreign tax limitation?
A simplified foreign tax limitation is an election made by the individual to determine the
Alternative Minimum Tax
(AMT) foreign tax credit limitation on the basis of the individual’s foreign
. The individual must choose this when they claim the AMT foreign tax credit in the first year. Once elected, this limitation may apply to all the future years. The individual may need the approval of the IRS if they decide to cancel this election.
Would the purchase of property in Mexico qualify for foreign tax credit?
In most situations, foreign tax credit is claimed on taxes that were paid to a foreign country. If the individual had to pay taxes to Mexico on their purchase of the property, then the individual may claim the credit for this purchase.
Under what circumstances can an individual claim credit for tax paid in a foreign country?
An individual may be able to claim credit for foreign taxes provided they meet the following conditions:
The tax is imposed on the individual
He/she either pays or accrues the tax
The tax is a legal foreign tax liability
Can an individual claim foreign tax credit if they work for a foreign country from the US itself?
An individual may be able to claim foreign tax credit for work done from the US provided he/she pays the taxes to a foreign country. If any part of the tax is refunded by the foreign country, then the individual may not claim that much amount as credit.
Would an individual be disqualified from making work pay credit if he/she claimed foreign tax credit?
An individual may not be disqualified from making work pay credit if he/she claims foreign tax credit. He/she may claim both.
Can an individual claim credit on money that they had made in 10 days in a foreign country?
An individual may be able to claim credit on money that they make in a foreign country for 10 days if the money is considered to be income and the individual pays tax on it in the foreign country. He/she may either carry back the tax for a year or carry it over for a period of 10 years.
Paying income tax can sometimes have a great impact on your finances. Things can get worse if you end up paying tax for the income you earned in a different country in both that country as well as the US. That is why it is important for you to be aware of what foreign tax credit is and how you may qualify for it. Understanding the various aspects for foreign tax credit will prevent you from being taxed twice for the same income. You may ask an Expert if you have any questions or need further information about foreign tax credit.
Recent Foreign Tax Credit Questions
Hey, I'm a US green card holder since 2006. I lived in the
I'm a US green card holder since 2006. I lived in the states years. Since July 2013 I left the states with the intention of not coming back.
Which steps do I need to take to make this happen officially and not be tax reliable earned abroad.
: A query about Form 8917 (Tuition and Fees Deduction).
A query about Form 8917 (Tuition and Fees Deduction). Assume I'm a US citizen living in the UK and that I worked from Jan to Aug 2014 earning a (measly) income of $12,471. Then from Sept to Dec 2014 I was a full-time university student. Assume that based on completing Form 2555 (Foreign Earned Income), I didn't have to pay any US tax; i.e. line 78 of 1040 was zero. Would there be any advantage to me if I was to also file a Form 8917? Completing that form tells me that my Tuition and fees deduction (line 6) is $3,505. Entering that value in line 34 of Form 1040 results in my adjusted gross income of negative $3,505. Line 78 of Form 1040 is, however, still zero. Would I be correct in assuming that there is no point in my filing a Form 8917?
, My husband worked the whole yr in the US and I worked
, My husband worked the whole yr in the US and I worked half there. Then i came in june to mexico to take care of my mother and i worked here. The money i made here in mexico was already taxed. So should I declare the income I made here in mexico
in my US taxes? Wouldnt this be double dipping, since I already paid taxes of that income here in mexico?I made $8400 before taxes or gross income is $6668 dollars, and after taxes or net is $ BTW I am double citizenship here in mexico and USA. Thank you!
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