FOREIGN INCOME WITH NO TAXES ON THE FOREIGN COUNTRY

Forum|Forum|3 years ago
April 12, 2023
1 reply
8 views

My client live in the US, and has some foreign investments and received some interest during 2022.

Those interest did not pay taxes on the foreign country, so there is no way to get for a Foreign tax credit over it. Is there income taxable in US even if it was exempt of paying taxes on the country of origin?

Thanks,

Individual

This topic has been closed for replies.

dascpa

Level 11

Taxpayer's are taxed on their worldwide income so yes, you must report it on the 1040.

A

andreactamayoAuthor

Level 3

Yes, I am reporting those, but what happen when you can not take a foreign tax credit or deduction over it? Should they pay US taxes over foreign exempt income?

dascpa

Level 11

"Exempt". Be careful with that word. Interest income may be exempt in that country, but it's not in the U.S. If you believe you have U.S. exempt income you have to cite the Article # of the treaty and file IRS Schedule OI of Form 1040-NR to explain the exemption. That does not mean you have to file the 1040-NR, just possibly that form.

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