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rahamies
New Member

Can I deduct foreign tax credit from VA taxes?

It was ok to deduct the tax credit from federal taxes but no deduction from state taxes was made by turbotax, so now there is a lot to pay! Cannot see how a state can have income from sale of a property in another country.

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Can I deduct foreign tax credit from VA taxes?

Foreign Tax Credit at the Virginia state level is specific to pension benefits obtained for foreign employment where a foreign country tax was paid on the pension.
Virginia Law:  § 58.1-332.1. Credit for taxes paid to a foreign country on retirement income.

There is no foreign tax credit for taxes paid on other transactions such as investments.

Virginia residents may claim a credit for income taxes paid to a foreign country on pension or retirement income derived from employment in a foreign country. The retirement income must be included in Virginia taxable income on the return to which this credit is applied. The credit is nonrefundable and excess credits cannot be carried forward.

To compute the credit, the foreign currency must be converted into U.S. dollars using the prevailing exchange rate that most nearly reflects the value of the currency at the time the taxes were actually paid to the foreign country.

For purposes of this credit, a foreign country shall include all possessions of the United States. Any foreign country that does not qualify for the federal foreign tax credit (IRC 901[j]) does not qualify for this Virginia credit.

Complete Schedule CR, Section 1, Part 10 to claim this credit. Attach a copy of the return filed in the foreign country or other proof of tax payment to the foreign country and a schedule showing computation of foreign currency converted to U.S. dollars.

If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67


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3 Replies

Can I deduct foreign tax credit from VA taxes?

Foreign Tax Credit at the Virginia state level is specific to pension benefits obtained for foreign employment where a foreign country tax was paid on the pension.
Virginia Law:  § 58.1-332.1. Credit for taxes paid to a foreign country on retirement income.

There is no foreign tax credit for taxes paid on other transactions such as investments.

Virginia residents may claim a credit for income taxes paid to a foreign country on pension or retirement income derived from employment in a foreign country. The retirement income must be included in Virginia taxable income on the return to which this credit is applied. The credit is nonrefundable and excess credits cannot be carried forward.

To compute the credit, the foreign currency must be converted into U.S. dollars using the prevailing exchange rate that most nearly reflects the value of the currency at the time the taxes were actually paid to the foreign country.

For purposes of this credit, a foreign country shall include all possessions of the United States. Any foreign country that does not qualify for the federal foreign tax credit (IRC 901[j]) does not qualify for this Virginia credit.

Complete Schedule CR, Section 1, Part 10 to claim this credit. Attach a copy of the return filed in the foreign country or other proof of tax payment to the foreign country and a schedule showing computation of foreign currency converted to U.S. dollars.

If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67


NOT INTUIT EMPLOYEE
USAR 64-67 AIS/ASA MOS 9301 - O3

- Just donating my time
**Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.
rahamies
New Member

Can I deduct foreign tax credit from VA taxes?

Thank you very much for your answer and taking the time to answer so comprehensively. I am sorry to learn that I still have to pay additional taxes on top of the already very high cap gains tax I paid in Finland. But there is nothing we can do about it so I just have to go ahead and pay and not complain any more! Thanks again~! Gunilla
VATT
New Member

Can I deduct foreign tax credit from VA taxes?

Virginia's Department of Taxation apparently construes Va. Code § 58.1-332.1 as follows:  Virginia retirees receive a Virginia income tax credit for foreign taxes paid only for such taxes on "any pension or retirement income . . . derived from foreign sources as a result of past employment in a foreign country."  Should TurboTax be revised to make this clear?

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