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Paying Taxes Abroad? Take Credits Here.

  2021-08-25

 

Taxpayers who live in one country and work in another find themselves facing a familiar, yearly problem.  Two different governments try to tax you on your income at the same time.  Say you live in France, but you are a U.S. citizen who earns a wage, or perhaps runs a small business, in France.  France taxes you as a resident already, but the U.S. wants to tax you as a citizen.  One income. Two sets of taxes.  What's a taxpayer to do?

 

Taxpayers like you try to use the taxes they pay abroad to offset their U.S. taxes on their foreign income.  The foreign tax credit is one such mechanism to do just that.  However, knowing how to accurately claim your foreign taxes as a credit is not always easy.  Or even whether the taxes you paid abroad should be claimed as a credit at all.  Instead of taking a credit, foreign taxes can be taken as a deduction instead.  Or whether something like the “high tax kick out” can limit your benefits.  Or maybe the taxes you paid abroad cannot be taken as a credit at all.  These questions don't always have obvious answers. 

 

Getting the foreign credit right can be essential for your personal tax return and keeping your taxes as low as they legally can be.

 

Contact the professionals at IRS Medic to prepare your returns to use your foreign taxes to the biggest extent optimal.

 

-- The IRS Medic Team

 

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IRS Medic: Parent & Parent, LLP
144 South Main Street Wallingford, CT 06492
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