Exchange Currency

foreign tax credit

Reduction in income tax amount for U.S. taxpayers whose foreign-earned income is taxed twice - once in the country where the income is earned and then again in the U.S. The objective of the foreign tax credit is to avoid the double-taxation burden in accordance with the agreement (a taxation treaty) that the U.S. has with many other nations. Normally, the IRS allows a reduction up to the amount the taxpayer paid to the country where the income was earned. The taxpayer doesn't have to live or work overseas as this credit can also be claimed on the foreign income tax paid on returns from a mutual fund based in a non-U.S. territory.

Related information about foreign tax credit:
  1. Tax Topics - Topic 856 Foreign Tax Credit
    Sep 14, 2012 ... The foreign tax credit is intended to reduce the double tax burden that would otherwise arise when foreign source income is taxed by both the ...
     
  2. Foreign Tax Credit
    Nov 5, 2012 ... Foreign Tax Credit. If you paid or accrued foreign taxes to a foreign country on foreign source income and are subject to U.S. tax on the same ...
     
  3. Foreign tax credit - Wikipedia, the free encyclopedia
    Income tax systems that tax residents on worldwide income generally offer a foreign tax credit to mitigate the potential for double taxation. The credit may also be ...
     
  4. Foreign Tax Credit: Claiming a US Tax Credit or Deduction for ...
    Americans working abroad may claim a foreign tax credit on their US federal income tax return ... Find out how to claim the foreign tax credit on IRS Tax Form 1116.
     
  5. Foreign Tax Credit - TaxAlmanac
    Jan 18, 2007 ... The foreign tax credit is intended to reduce the double tax burden that would otherwise arise when foreign source income is taxed by both the ...
     
  6. TPC Tax Topics | Foreign Tax Credit
    The U.S. foreign tax credit is simple in concept. The United States employs a global tax system and, under the residence principle, taxes the income its residents ...
     
  7. Foreign Tax Credit Definition | Investopedia
    A non-refundable tax credit for income taxes paid to a foreign government as a result of foreign income tax withholdings. The foreign tax credit is available to ...
     
  8. Foreign Tax Credit And Withholding Tax Rates - Seeking Alpha
    May 11, 2012 ... Introduction. I am a US-resident dividend-yield and dividend-growth investor. Most of my current holdings are U.S. companies but over the last ...