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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
I have a business in Japan as I lived there years.
I have a business in Japan as I lived there for 20 years. Now that I am in the U.S I am keeping my Japanese operations open on paper. From 2015, many of my asian clients are now depositing money in my american account instead of my american bank as I am residing in the U.S.
If a client was invoiced from the Japanese company and reported on my Japanese tax return and on which I paid Japanese corporate tax, (which would be the amount of the invoice which was sent to the American bank), will there be IRS reporting issues as the money was not declared on my U.S. tax return directly but through income from my Japanese company?
In other words, the American account would show a deposit but the LLC would not show it as income. The Japanese entity would show a sale but a deposit in a U.S. bank. In the end, income from the Japanese operation would show on my U.S. tax return as Foreign Earned credit, but not directly.
The American company is an LLC and the Japanese corporation is a regular company with only one shareholder.
I am an a Canadian citizen on an h1b visa working in the
Hi I am an a Canadian citizen on an h1b visa working in the USA and will claim to be a resident for this year as I have been here over 183 days. I was offered a work from home job from Canada that I can do on my spare time here but would be paid in Canadian wages from a Canadian company. I don't want to get taxed twice on that income or my income here because of that job so just trying to make sure it's worth it?
I am a dual us/can citizen,I have 2 living siblings in Canada.In
I am a dual us/can citizen,I have 2 living siblings in Canada.In 1998 my father had a will done on same day as deeding his property solely to me .I am the executrix.. but will says that when all necessary fees paid I can sell it when I choose in part or entirety but must share equally with 2 living siblings.I don't know exactly how Canada treats this potential sale.I have paid all taxes,repairs and upkeep to property,lawyers fees with no help.I have taken no tax deductions on anything for this property.I asked the lawyer to give Dad life tenancy...he died in 2007..property vacant since then.How will us government tax me..Is it the assessed value of it in 1998 or fair market value when its sold.Should I have been taking tax deductions all these years...and can my out of pocket be recovered in any way?I am desperate for help.Please and thanks.
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