My client is a US and Canadian citizens who resides in Canada and only has investment income from the US. My understanding is that I report all income on the US return, then take a credit for the foreign taxes paid on that income. Do I just enter this on Form 1116 Parts I and II as dividend and interest income and enter the foreign taxes paid on these amounts or do I use Part III. The amount of foreign taxes paid is greater than the US taxes due so my client now owes no taxes on the 1040. I am concerned I have done this wrong.
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It is not as simple as that. You will need to refer to the US-Canadian income tax treaty, determine which country has the primary right to tax certain income, what rate apply to which type of income, whether saving clause or one of the exceptions apply, and then how foreign tax credit may be claimed on the US tax return based on these considerations.
It is not as simple as that. You will need to refer to the US-Canadian income tax treaty, determine which country has the primary right to tax certain income, what rate apply to which type of income, whether saving clause or one of the exceptions apply, and then how foreign tax credit may be claimed on the US tax return based on these considerations.
I have a US only citizen who has received Canadian Royalties. We claim the worldwide income on the US 1040 and of course, take the FTC for the Canadian Part XIII withholdings, do we need to file in Canada to justify the income withheld is correct? There is no refund of Part XIII withholdings, I am told.
Thanks, Ben H.
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