Publication 514 |
2000 Tax Year |
Introduction
If you paid or accrued foreign taxes to a foreign country on
foreign source income and are subject to U.S. tax on the same income,
you may be able to take either a credit or an itemized deduction for
those taxes. Taken as a deduction, foreign income taxes reduce your
U.S. taxable income. Taken as a credit, foreign income taxes reduce
your U.S. tax liability.
In most cases, it is to your advantage to take foreign income taxes
as a tax credit. The major scope of this publication is the foreign
tax credit.
The publication discusses:
- How to choose to take the credit or the deduction,
- Who can take the credit,
- What foreign taxes qualify for the credit,
- How to figure the credit, and
- How to carry over unused foreign taxes to other tax
years.
Unless you choose not to be subject to the foreign tax credit
limit, you claim the credit by filing Form 1116 with your U.S. income
tax return. Two examples with filled-in Forms 1116 are provided at the
end of this publication.
Comments and suggestions.
We welcome your comments about this publication and your
suggestions for future editions.
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www.irs.gov/help/email2.html.
You can write to us at the following address:
Internal Revenue Service
Technical Publications Branch
W:CAR:MP:FP:P
1111 Constitution Ave. NW
Washington, DC 20224
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helpful if you would include your daytime phone number, including the
area code, in your correspondence.
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