pk
Level 15
Level 15

Deductions & credits

@abhishtu2 , Namaste  ji.

 

(a) Under the US-India Tax treaty and utilizing the double taxation clause,  US  will give  you credit for  taxes paid to India.  However, the amount allowable  in the  current tax year ( year in which the sale took place ), the best case scenario is for US tax on that same doubly taxed foreign source income is nil.  But generally it is far less than that.

(b) Most states including MI do not recognize  US-Other country tax treaties  ( some states  do  or have their own  with  a neighbor foreign country -- e.g. NY with Canada )

(c)  Also to note there is  that your gain/ loss on alienation of  foreign real-estate for US Tax purposes is based on US laws  ( no  indexing of basis as is done in India.).  And  it is the lesser  of the  two gains  ( US and India ) that is doubly taxed -- generally US gain  is higher.

 

Is there more I can do for you  ?

 

Namaste ji

 

pk