tax treaty, double taxation

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tax treaty, double taxation

Post by mguile » Mon Mar 23, 2020 11:49 am

I am an American with income from US and Canada. Canada takes 15% withholding. I file us tax and I can never use up the Form 1116 Foreign Tax credits totally. Surely this is double taxation which is supposed to avoided due to the tax treaty between Can and US. What can be done. I have accumulated over $7000 in credits.

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Re: tax treaty, double taxation

Post by nelsona » Mon Mar 23, 2020 8:03 pm

That is the reality of how foreign tax credits work, unfortunately. Each year you should do your return with the tax as a credit or as a deduction, and choose which gives you the lowest US tax.
Unless you can earn Cdn income which is not taxed in Canada, it is not likely you will ever use this carryforward. There is nothing in the treaty to help this.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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