I have foreign source income (distribution - less than $6,000 - from my Canadian employer’s pension plan). The tax deducted at source is 25%.
If I include this gross distribution amount in my 1040, the tax I owe goes up by $2000 - thus total tax paid on my foreign income (including the tax at source) becomes 62%!!
TaxAct is generating all forms (including FTC, AMTFTC and so on…) but does not look like I am getting any real credit!!
Am I missing anything, can anybody shed light on this?
Foreign tax credit
Moderator: Mark T Serbinski CA CPA
It should generate a 1116 form, on which you report the $6000 (in USD) and the 25% tax. You will get some credit, but not likely the entire 25%.
That is how tax credits work.
That is how tax credits work.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best