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I am retired and moved to Japan last year. How do I get a credit on my U.S. tax return for the taxes paid on my Japanese tax return. All of my income is from the U.S.

I would like to know where I would enter the amount in a tax return for taxes paid to a foreign government (Japan).  I am preparing my mother's taxes and she moved to Japan on August 24, 2018.  She is a dual citizen, both United States and Japan.  Her taxable income sources are from the United States (social security, IRA distributions, dividends, bank interest, and net profit of her home sale in the U.S.).  Now that she has established residency in Japan, Japan is taxing her income from the United States.  We just finished filing her Income Tax Return for Japan.  We had to report all income received from August 24th to the end of the year.  We paid about $2,000 (in JPY).  

My understanding is that with the tax treaty between the U.S. and Japan, she cannot be double-taxed.  Therefore, she shouldn't be taxed on the income that she already paid taxes on in Japan or at least a portion of it.  Where would I enter the amount paid to the Japanese government in TurboTax.  The only information I can find is reporting taxes paid to a foreign government for income generated in that foreign land.  But for my mother's case, she was taxed on income based in the United States.  How would I handle such a case?  I would appreciate any insight and advice from you experienced professionals reading this question.  Thanks!

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1 Reply
MarilynG
Expert Alumni

I am retired and moved to Japan last year. How do I get a credit on my U.S. tax return for the taxes paid on my Japanese tax return. All of my income is from the U.S.

Yes, your mother can get credit for Foreign Tax she paid on her US income, and you are correct that she will not be double-taxed on this income. 

When she reports her income in TurboTax, the Foreign Tax Credit is in lieu of US tax that would be assessed on her US income.

Here's how to claim the Foreign Tax Credit:

https://ttlc.intuit.com/replies/3302405

Click the link for a more detailed article on Form 1116, Foreign Tax Credit

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