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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29569
Experience:  Taxes, Immigration, Labor Relations
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This question pertains to schedule A, line 8

Resolved Question:

This question pertains to schedule A, line 8 "Other Taxes".
We paid $ 1139 in Fedral Taxes last year. If 2005 income taxes paid to a foreign country or U.S. possession are deuctible on your Federal return, why are Federal income taxes paid by someone residing in the U.S. not tax deductible?
Submitted: 11 years ago.
Category: Tax
Expert:  Lev replied 11 years ago.
Do you mean Federal income taxes withheld from wages?
Customer: replied 11 years ago.
Reply to Lev's Post: No, that was the final amount owed in Federal taxes after the rerurn was completed.
Expert:  Lev replied 11 years ago.

If I understood you correctly you mean income tax for 2004 that you paid in 2005 after filing tax return for 2004. Is this correct?

Customer: replied 11 years ago.
Reply to Lev's Post: Yes, that is correct.
Expert:  Lev replied 11 years ago.

First of all foreign taxes are not fully deductible. The deduction of foreign taxes in general is based on the following rules:



  • calculate US income tax (A)

  • allocate an income that is taxable in foreign country(B)

  • allocate US income tax to the income in foreign country(C)

  • calculate the foreign tax credit that is limited to US income tax allocated to the income in foreign country(D)

This is done to avoid double taxation for the same income.


In contrary, US income taxes for 2004 and 2005 are based on different income bases and there is no double taxation of the same income. Thus you paid $1139 for income in 2004 and because it is not related to the income in 2005, it should not be countable in 2005 tax calculation.

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