@goyal_raj wrote:
Thanks Venessa.
Any reason behind not states not giving preferential rates on long term gains or even tax credit? This is like double taxation especially if i pay the full tax in a foreign country. Any way it can be avoided?
First, I don't believe your US tax credit can be any more than the US tax on the income would have been. If the foreign tax on the capital gains is $20,000 and the US tax is $15,000, the maximum foreign tax credit is $15,000. Otherwise, the foreign tax you paid on the capital gains would be reducing the US income tax on your US income.
Generally, your state will tax you on all your world-wide income, to pay for the various expenses and benefits of living in that state.
North Carolina does appear to have a foreign tax credit.
https://www.ncdor.gov/taxes-forms/individual-income-tax/credit-income-tax-paid-another-state-or-coun...
Turbotax should include this computation, although sometimes the program does not include every state computation. The requirement to include a receipt or other proof of payment of the foreign tax suggests you won't be able to e-file, although it may be that you can e-file first and mail the receipt separately.
