A Brief Review of US Foreign Tax Credit Conditions

 

Expatriates from the United States have a few constraints when it comes to claiming foreign tax credits. These limitations include:

·       Mandatory Tax Imposition: You will not be eligible for the FTC if you do not pay taxes in your resident country. In other words, if you're in Canada and have automatic deductions for Canadian income taxes taken out of your paycheck, it's considered a tax on your earnings, hence eligibility.

 

·       Only Legal and Genuine Foreign Tax Liabilities Qualify: It's quite obvious what this means. When paying taxes to a foreign country, make sure that the tax is lawful and that you are required to pay it before you may claim a foreign tax credit.

·       The Foreign Tax Has To Be Paid Or Incurred By You: In order to qualify, you must have paid the tax, accrued it, or be liable for paying it.

·       It Has To Be an Income Tax: One must have paid income taxes to a foreign jurisdiction in order to be eligible for the FTC. According to the IRS, certain foreign tax categories are ineligible for the FTC, including

a)  Income that has been exempted from taxes, for instance, if you have already taken advantage of the Foreign Earned Income Exclusion.

b) Taxes accrued to a foreign government that has a social security pact with the United States.

You may be eligible for the credit if you file a non-resident tax return and pay or accumulate tax to a foreign nation or U.S. possession on income from overseas sources that is inextricably linked to a trade in the United States.

 

Fantastic points to consider when choosing professional accounting services

 

When tax season approaches, a lot of stress can build up. This is because you are required to fulfill your legal obligations and pay taxes. However, sorting out the documents and knowing the right taxes to file can be quite taxing. Instead of suffering, you can opt to outsource tax services from a reliable accounting firm. This will help you enjoy all the benefits of paying taxes without being too stressed. Before you hire a professional, some of the points to consider include:

●        Licensing and proper credentials - Before you hand over your credentials for tax filing, you should take a deeper look at the company. Are they licensed by the body in charge of accounting professionals in your country? Do the employees have any certification or training in accounting and finance? Do they have a good idea of tax laws in your region? Having this information will boost your confidence and prevent you from paying fines for wrongful filing.

●        Experience - When opting for an accounting firm to handle your taxes, you want to settle for a firm that has numerous clients. The more knowledge they have about different tax systems, the better for you. They should have dealt with the situation beforehand. For example, the company should have prior experience dealing with the Canadian tax system if you want to file a Canadian Corporate Tax claim. This will save you time and money

●        Services offered - Before you commit to a company, knowing what they do is important. Some companies only offer services for specific situations such as corporate taxes while others offer a variety of services. Finding a company that offers the specific service you are looking for such as Expat Tax Return assures you that they know what they are doing. They will be able to provide you with all the requirements and the appropriate forms for your taxes.