Welcome to the IRS's international individual taxpayers assistance video series. Did you know that if you paid tax to a foreign country, you may be able to claim a foreign tax credit? Learn the steps to determine if you can claim the foreign tax you paid as a credit on your federal income tax return. Step 1: Did you pay or accrue tax to a foreign country? In most cases, you can claim the credit only if you paid or accrued the tax to a foreign country or US possession. In some cases, you can claim the credit even if you did not directly pay or accrue the tax yourself. For example, if you file a joint income tax return, you can claim the credit based on the total foreign income taxes paid or accrued by you and your spouse. Refer to Publication 5:1 for foreign tax credit for individuals. You can get it by going to IRS.gov and typing "pub 5-1" in the search. If you did not pay or accrue tax to a foreign country, you are not qualified for the foreign tax credit. But if you answered yes, move on to Step 2. Step 2: Were you the one legally liable for the tax? You can claim a credit only if you have the legal liability for the foreign taxes you paid. For example, a tax that is deducted from your wages qualifies as a tax you are legally liable for. If you answered yes, now move on to Step 3. Step 3: Ask yourself if it was an actual foreign tax liability. You cannot take a foreign tax credit if it is reasonably certain you will get the amount back as a refund, credit, rebate, or other payment. For example, if you earned $100 of interest income from a foreign...
Award-winning PDF software
Video instructions and help with filling out and completing What Form 2220 Abroad
