Deductions & credits

To be confident I understand the situation correctly. 

• I expect that all amounts are in US Dollars.
• You received a cash payment of $5,325.
• You paid Canadian Taxes of $675.
• You received a 1099-NEC for $6,000.

To post all of these:

1. You would post $6,000 (1099-NEC) to Self-Employment.
   1. You can then deduct various expenses.
   2. This money will be taxed for:
      1. Income tax and
      2. Self-employment tax (15.3%).
2. Select Search and search for foreign tax credit. 
   1. Select the Jump to link.
   2. When you reach the screen Do You Want the Deduction or the Credit? select the option you prefer for your situation.
   3. If you select Take a Credit:
      • Select Continue on the next screen, then select No to fill out Form 1116
      • When you reach the screen Country Summary, select Add a Country
      • Answer the questions about your foreign income, taxes, and expenses on the following screens.
      • When finished, you'll be taken back to the Country Summary screen. 
      • If you have income from other countries to enter, select Add a Country. Otherwise, select Done.
      • Answer the questions on the following screens until you reach your Foreign Tax Credit Summary. 
      • If you’re finished with this section, select Done.
   4. If you select Itemized Deduction:
      • Enter your foreign taxes paid on the next screen. These should show up in the Deductions & Credits section of your tax return, under Other Deductible Expenses

In most cases, taking the credit works out better than the deduction. 

We'll help you decide which one's best for you when you go through this section.

If the $675 is greater than the US Tax, you only get credit to reduce the US tax.