Foreign tax credit

[pvbemmelen84]

My wife had income from the Netherlands in January and February 2016, and from the US the remainder of the year. Dutch taxes were withheld, but no US taxes. She lived in NYC the full year so is subject to US (and NYC state and city) taxes. Can you please explain how to file the dutch taxes with the IRS. Thanks.

[MargaretL · Accepted solution]

First, please report you wife's foreign income, then visit Foreign Tax Credit section in Deductions and Credits section.

Her income is reported as foreign income as follows:

1. Federal Taxes
2. Select Wages and Income 
3. Scroll down to Less Common Income
4. Select Foreign Income and Exclusion - Answer “Yes” to “Did you make any money outside the United States?” and follow the interview questions. You will be asked to enter income from a U.S company, a foreign company, self-employment income, housing allowance, income from a Form W-2, 1099-MISC, schedule K-1 from a business or simply cash income - check the box A statement from my foreign employer (could be cash).

Then, visit Foreign Tax Credit:

1. Federal Taxes
2. Deductions & Credits
3. Scroll down to Estimates and Other Taxes Paid, select Foreign Taxes

NOTE: If I am misunderstanding the nature of your wife's income and, let's say she has investment income, such as interest or dividends... enter the respective income as if she received form 1099-INT or form 1099-DIV, enter the income and foreign tax pad in respective boxes.. THEN go to foreign tax credit section and follow the interview questions