I am a US person for tax purposes and generate some passive income (interest, capital gains) from India.
US-India has DTAA agreement and it clarifies which country holds first right to tax different types of income etc. To clarify, this isn’t my focus for this post.
Coming to my question. India follows a different tax calendar than US which runs from April to March of the following year. And taxes are due by July in general.
While claiming foreign tax credit in US (federal/ NC state) tax returns, which date ranges to consider to calculate foreign tax credit?
Same as US tax calendar (Jan-Dec)? If so, how to calculate foreign tax credit since income from Apr-Dec isn’t due for taxes in India and I can’t calculate taxes paid for these months yet. Plus taxes paid in India are for Indian tax calendar, so how to calculate the Jan-Mar portion out of the paid taxes?
Indian tax calendar(Apr-Mar)? If so, do I leave out Indian income from Apr-Dec for US return and claim them once Indian tax is paid next year and show them on US return next year?
Is there any other approach which works better than above options?
Thanks in advance. 🙂
