@pk
Thank you so much for your reply, it’s already helped me a lot.
China tax bureau gave individual tax benefit for renting residential property, which is very lower tax rate and, in the meantime, just collecting half of the total tax with that lower rate, that’s why in the example I only named $300 as rental income tax to China.
However On US taxes on Schedule-E income, after deducting expenses, property taxes, dues, and fees, depreciation,etc, the net rental income from Schedule E will still increase her AGI compared with previous years without this rental income, the increased AGI which increased her tax liability I just named it $800, I also filled out a draft version form 1116 and 1040, according to US tax Schedule-E and from 1116 foreign tax credit, she still owed $500, as I stated, that’s because of different tax rate, different tax benefits, and different tax rules between China and US, so the question is based on US-China tax treaty, does she still need to pay this $500 to IRS? Or can she just report that she already paid $300, and eliminated $300 in form 1116 and let $500 alone?
Thank you very much.
Have a great day.
