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Tag Archive for Foreign Tax Credits

Expat Guide To Foreign Tax Credit Carryover

As an expat, no matter where you live and work, your US and foreign income is subject to IRS taxes. The fact that the majority of countries around the world also require you to file and pay tax locally makes the matter even more complex. In order to avoid double taxation, the US allows you to take a Foreign Tax Credit based on the foreign taxes you pay to your resident country. The Foreign Tax Credit is subtracted directly from your US income tax. However, if you cannot claim the full credit amount, you are allowed a carryover. Carryovers do expire, though, so read on to find out how best to utilize this savings! Read more

Do Tax Treaties Protect Expats From Double Taxation?

American citizens and green card holders, including people who have the right to U.S. citizenship, are required to file a federal income tax return each year declaring their worldwide income, wherever in the world they live. They may also have to pay U.S. taxes.

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Canada Is Checking Foreign Tax Credits

It is not uncommon for e-filed returns or paper filed returns that claim a credit for US tax for CRA to request verification.

US tax paid per Canadian withholding slips are not requested because the slips are issued  by a Canadian entity. They are looking to US tax claimed per US reporting slips such as W2s, 1099s, 1042s or from the US 1040/1040NR tax returns. US social security tax and medicare (ie., FICA) is creditable if it relates to US source wages or services performed in the US which is evident  on the W2.

Foreign tax credits claimed in respect of US computed from  the US tax return based on determination of what portion of the tax payable of the return relates to US source income that is creditable is usually supportable by submitting to CRA your schedules and copy of the federal (and state where applicable) return. Recently CRA has Read more

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