How much credit for tax paid overseas on property sale is admissible

[abhishtu2]

Hi

In June 2024, I sold my home in India. As per Indian tax rules, the buyer deducted TDS of 8million rupees (approximately $ 93000). This is because for a non resident, the buyer has to deduct tax on the entire sale price even though LTCG tax will take into account purchase price, cost inflation index etc.

However, when I file my Return of Indian Taxes later this year (usually around June for the financial year April 2024 to March 2025), my actual tax on gain would be much lower at around $57000 and hence I will get a refund of excess TDS.

My question is : while filing US tax return for 2024, should I show the TDS already deducted or only the likely tax of 57K. My understanding is that it is the latter. Is that correct?

If yes, should I show the ESTIMATED lower figure even though I have not filed my Indian Tax Return as yet?

Thanks in advance for your help.

[AmyC]

You should show the correct amount. If you are sure of the amount, use it. Otherwise, you can file an extension of time to file the return. This allows you to file in India and get the correct amounts to put on the US return. This does not extend your time to pay. You should still make a payment by April 15.

To calculate the payment to make, use the expected tax for India on your US return. Make Payments online.

References:

• How do I file an IRS extension (Form 4868) in TurboTax Online?
• Do I need to file an extension for my personal state taxes?

[abhishtu2]

Thanks for the clarification.

In any case, my guess is that the final Indian tax amount MAY vary from the estimate only by a couple of hundred dollars, both the figures being much higher than my tax liability in USA.

Thanks again.