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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
If my pension originates in Brazil and I pay taxes on this
If my pension originates in Brazil and I pay taxes on this pension in Brazil, do I get any offset on my US tax obligations, since I am essential obliged to pay income taxes under two different jurisdictions on the same income?
This might be a little confuising, but I'll do my best to explain.
This might be a little confuising, but I'll do my best to explain. I am a Canadian resident with dual citizenship (US and Canada). I will be making a temporary move to the US for 2 years max (could be shorter) for my son to receive speech and autism therapy. I have a small income coming in from Canada ($320 a month just from the child tax benefit and universal child tax benefit). Canada is allowing me to keep these monthly payments if I keep "residential ties" in Canada (house, car registration, a spouse still in canada, bank accounts etc), which I am. Every year I file both Canada and US tax using my residential address in Canada. Next tax season though, I will also be considered a resident of California since I will be living there for two years I will eventually establish residency for tax purposes. I also recently received my California resident card with my parents address, so I am confused as to how to file my taxes being a resident of two countries for next tax season. I would also like to add that we need to establish residency in California to be eligible to get health insurance there.
My question is....how will I file taxes? Will I use my parents address for filing my US tax and my Canadian address for filing Canadian tax? Or will I still use my Canadian address for both? (If I use my Canadian address, I won't be eligible for health insurance since I believe they base it off the taxes you file) Or use my US address for both? (which I think will affect receiving my son's canada tax benefits to pay for his therapy) Sorry if its confusing. I just want to do it all correctly so I dont get into any trouble regarding taxes.
Trying to look up pension income taxability -sourced
Trying to look up pension income taxability for UK-sourced pension for US citizen
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