Foreign Tax credit in US - Should it be dollar to dollar?

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leescm4
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Joined: Sat Apr 03, 2010 6:03 pm

Foreign Tax credit in US - Should it be dollar to dollar?

Post by leescm4 »

The total of Cad bank interests on all T5 let say = Cad 5000. I figure out using Quick Tax (Canada) for filing, the tax owe is let say Cad 1000.

When adding this Cad 5000 bank interest + Cad 1000 tax paid (ie: converted to USD) to Turbo Tax in 1099-INT section with foreign tax paid (Cad 1000 equivalent) specified and claiming foreign tax credit (Cad 5000 equivalent), it turns out my US tax owe increases a few US hundred dollars (compared with before entering this Cad bank interest in 1099-INT)

My understanding is it should be a dollar to dollar (ie: converted to USD amount) so that it will almost write off the tax I already pay in Canada? But now, by reporting the Cad bank interest, there is a few hundred dollars more added to my US tax owe. Is it double taxation?

Please advice.
Thanks.
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