Treatment of foreign tax exceeding treaty limitation

[user17588264765]

A different thread acknowledged that foreign tax withheld in excess of the treaty limitation with the taxing country is not eligible for credit.  My understanding is that if foreign tax is instead taken as a deduction, this eligibility requirement does not apply so the entire foreign tax paid can be taken as a deduction instead of a credit even if it exceeded the treaty limitation.  My question is:  Can a credit can be taken for the eligible tax within the treaty limitation and also a deduction taken on schedule A line 6 (other taxes) for the amount taxed in excess of the treaty limitation?  

[pk]

@user17588264765 , without knowing the details of your situation such as which country, the type of income, etc. etc. ( the more detail the better ), all I can provide is generalities ---

(a) you must use the whole Foreign Tax  for credit or deduction -- cannot  mix and match.  What I am not quite sure about is if mixing is allowed when  incomes are of different type -- I need to re-look at the code

(b)  Note that  deduction is limited by SALT  limits  for the tax year in question.

(c) You also have  the right to ask the taxing country to abide by the treaty conditions in your filing  ( i.e. don't accept the Taxed Deducted  at Source )  for country.

I will circle back once I hear from you .  If you do not wish to elaborate here in the  public arena , you can always PM me  ( just NO PII --- Personally Identifiable Information )

Is there more I can do for you ?

[user17588264765]

Thanks. You’ve answered my question, zI think, but it would be nice to know the authority. Can you refer me to some IRS instruction?

All my foreign income is passive—stock dividends—from several countries, all but one of which (the UK) withhold in excess of their treaty limitations. I enter only the maximum tax under each treaty on line 8 of form 1116.  I think you opined that I cannot enter the excess as an “other tax”  deduction on line 6 of schedule A.  Correct? 

Switzerland is the worst offender, withholding 35% in flagrant violation of its 15% treaty limitation. Its procedure for claiming a refund is far too onerous for most individuals to pursue.

I do not understand why individuals instead of the State or Treasury Departments are burdened with enforcing our tax treaties. Good luck enforcing the investment commitments being made by some of these same countries to negotiate low tariff rates!

Thank you again…