Scenario 1 - If I say I got interest as $1500 and Foreign tax held was $600 - My Tax due is $6015
Scenario 2 - If I say I got interest as $1500 and Foreign tax held was $601 - My Tax due is is increased to $6615
1. How is it possible that I paid more tax in foreign and my Tax due to IRS increased by $600?
2. What's the logic or rule behind this? Is there a limit on foreign Tax paid of $600?
3. Should I just my final income as $900 ($1500-$600) and make my life easy? because if I list Foreign tax paid, I will have to file more documents for Alternative Minimum Tax (AMT)? Also I need to update Form 1116.
