As your parents have their Green Card, they can file the Form 1040 with TurboTax and not the Form 1040NR.
Unlike most countries, the US taxes worldwide income. This means the US taxes income no matter where it is earned. Assuming that your parents are living in this county, they can take the Foreign Tax Credit. The Foreign Tax Credit can be claimed for tax paid to a foreign country on income that is also taxed by the United States. The Credit is the lesser of foreign tax paid or the US tax allocated to the foreign source income.
To find the Foreign Tax Credit, follow these instructions:
Both the credit and the deduction are entered in the same place. Here's what you do:
- Make sure you've entered all your foreign income.
- From within your return, search for foreign tax credit and select the Jump to link in the search results.
- Answer Yes to Did you pay foreign taxes in 2019 or have credits to use from a prior year?
- Follow the instructions to get the credit or deduction.
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.
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