Hello!
I am ready to do my taxes but I am confused. I am a US citizen living in Italy for the past 2 years. Last year I did my US taxes, paid my federal and state taxes through my employer (W2) and after I did my Italian taxes and paid the balance of what I owed to Italy (their tax bracket is higher)
now in 2024 I am ready to file my US taxes. My federal and state taxes have been withheld through my W2 but I came across this Foreign tax credit… can I take it?
I am unclear
any help is appreciated! Thank you
The foreign tax credit keeps you from paying tax to two countries on the same income- if the country is on good terms, on a list, with the US (no terrorists). Italy is one of them. There is a treaty between US -Italy that can exempt some income or change how it is treated. See United States Income Tax Treaties for other countries.
You can amend a tax return for up to 3 years.
Thank you so much! If Italy already gave me a credit for my us taxes (they tax more) do I still apply the foreign tax credit? This is where I get confused
Yes, the US will give you a credit for taxes paid to Italy on the same income because you are a US citizen. The credit will be the lesser of:
The Foreign Tax Credit will be calculated based on the numbers you enter. For Italy, you should enter what they actually charged after the US tax credit.