Tax Treaty Foreign Tax Credit for US citizen

[Exergy]

Hi,

I tried to use FTC to reduce taxes in USA for the taxes paid abroad on interest income. It turns out that FTC will only credit to about 40% of what interest taxes were paid abroad.

How can I use the tax treaty to reduce US taxes further? Country abroad is Norway

[AmyC · Accepted solution]

You won't be able to reduce taxes beyond the FTC. Norway tax treaty with the US shows the US - resident state- will tax the interest earned in Norway but does allow the foreign tax credit. The credit is the lower of the tax rates on the same income.

[Exergy]

Thank you!