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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
United states citizen works in singapore part of the year and
united states citizen works in singapore part of the year and was paid taxable earnings in british poulds with british taxes withheld. there is no w-2. how is this reflected on a form 1040
I have a US immigration visa (Diversity visa) and I will come
I have a US immigration visa (Diversity visa) and I will come to USA soon to get the Green Card.
I live and work in an Arab Gulf country but I am originally a Lebanese citizen.
I own an apartment, piece of ground and store in Lebanon since 2010. Also, I have 5 bank accounts in Lebanon and the Arab Gulf country, and the total amount of saving money in these accounts is approximately 100 thousand dollars.
My salary is about 2700 $ per month. I sometimes have other source of income that may excess 2000 $ per month, but it is not a fixed income.
In the first two years and because of special circumstances, I have to stay outside USA, but I will renew my Green Card every 6 months.
I have many questions:
- How would I be subject to the (FATCA) law?
- What are the taxes and the tax proportions that I'll pay?
- Is that my real estates and my saving money in the bank will be outside the framework of the tax (FATCA) because I own it before getting the Green Card? Will USA tax authorities get a proportion from them or they will get only taxes from my income in future (after I get the Green Card)?
- Do I'll pay all taxes on income only and will be calculated as of the date I entered the United States?
- Do I benefit from Foreign Earned Income Exclusion (FEIE)?
- How and when should I provide income tax return, knowing that I will enter USA in the beginnings of September 2015?
My client is a US citizen residing in Canada. He has T-4
My client is a US citizen residing in Canada. He has T-4 Canadian income that is subject to CPP tax and US self-employment income. Does he have to pay SS tax on both his T-4 income and his US self-employment income?
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