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Paul2000
Returning Member

How to claim tax treaty paid foreign tax as credit not as income

According to US/China tax treaty, ARTICLE 22.2(a) ‘ELIMINATION OF DOUBLE TAXATION’ ‘UNITED STATES SHALL ALLOW TO A RESIDENT OR CITIZEN OF THE UNITED STATES AS A CREDIT AGAINST THE UNITED STATES TAX ON INCOME’.

 

I want to claim my paid tax in China as credit instead of 'negative income' under less common income, as this is what the treaty was defined. How can I do that in Turbotax? Is it right to put in Form 1040 schedule 3 additional Credits, Part I line 6c? Or just use Smart worksheet of Part I item K putting in 'Form 8833' with $ amount of Credit number?

 

Thanks,

Paul

 

 

 

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1 Reply
jtax
Level 10

How to claim tax treaty paid foreign tax as credit not as income

FYI the term for "negative income" is a "deduction."

 

To claim a credit you need to walk through the foreign tax credit (FTC) interview. It is moderately complex. You don't automatically get to deduct the whole amount of foreign taxes. First the US must tax that same income, it must be an income tax (no social security, real estate, etc.). Secondaly, there is a limit to how much you can claim based on the proportion of your foreign income to your worldwide income. Sometimes you get it all, sometimes you don't depending upon your other income.  But TT will figure that you for you. Just carefully enter the information it requests.

 

See this FAQ for how to start the FTC interview.

 

https://ttlc.intuit.com/community/entering-importing/help/where-do-i-enter-the-foreign-tax-credit-fo...

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