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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 am cofounding a tech company based in California with a US based cofounder. The cofo
I am cofounding a tech company based in California with a US based cofounder. The cofounder is also the CEO of the company. He incorporated the company and prepared several legal documents via Clerky.com.
I was asked to file an 83b Election form to the IRS.
I recieevd 25000 shares of common stock in the company at a purchase price of $0.00001 per share.
I am Canadaian and currently residing in Canada. I plan to move to California this year to pursue a full time opportunity with Another company.
Do I need to file form 83b to avoid tax headaches down the road?
I am a tax associate with a client from Italy. She is working
I am a tax associate with a client from Italy. She is working in the United States with a
Green Card Resident Alien status. We are filing Married Filing Separately, listing her husband's name and Social Security #. Her husband also has a Green Card. Her husband
works in Italy and files a tax return in Italy as a resident. He comes to visit my client in the United States different times a year. Does he have to file any information as a Green
Card holder with the United States?
A foreign Corporation with foreign shareholders wants to market
A foreign Corporation with foreign shareholders wants to market and sell its products in the USA. For this purpose, they have decided to establish a corporation in the state of Texas. The application for EIN form SS4 has been submitted, however the requested # ***** not arrived yet. They have received a couple of Sale Orders, so they're trying to ship product from Mexico. However, one of their clients has requested a W-8 Form so the question is:
What W-8 form do they need to provide (there are too many) and are they going to withhold a 30 percent over the total sales and not necessarily on the profit?
They already paying taxes on net profits in their country.
Can you answer this question?
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