Foreign Tax Credits
Foreign tax credit rules for U.S. taxpayers with cross-border income
Format
Online
NASBA Field of Study
Taxes
Level
Basic
CPE Credits
1
Author(s)
Chaya Siegfried
Availability
1 year
Product Number
USITFTC26SSO
Reducing double taxation risk
Cross-border activity can expose U.S. taxpayers to tax in more than one jurisdiction on the same income. This course explains how the foreign tax credit system allows eligible foreign income taxes to reduce U.S. tax liability. Learners will also be exposed to the limitations designed to keep the credit tied to foreign-source income.
Creditable taxes and limitations
Participants examine the mechanics of the foreign tax credit, including how to:
- Identify creditable foreign income taxes
- Apply the Section 904 limitation formula
- Determine when foreign taxes may be deducted instead of credited
The course also addresses the separate category limitation rules, recent regulatory developments affecting the definition of a creditable income tax, and selected H.R. 1 changes affecting Section 951A income.
By the end of the course, learners will be better prepared to recognize when foreign taxes may qualify for the credit and how the limitation rules can affect the amount available in a given tax year.
Note: This course is an except from International Taxation, part of Tax Staff Essentials Level 4.
Who Will Benefit
- Tax practitioners advising U.S. taxpayers with foreign-source income
- CPAs preparing or reviewing returns involving foreign taxes
- Corporate tax professionals working with international tax issues
- Accounting and finance professionals seeking foundational FTC knowledge
Key Topics
- Foreign tax credits
- Creditable foreign income taxes
- Section 904 limitation
- Separate category limitations
- FTC carrybacks and carryforwards
- Overall domestic losses
- Overall foreign losses
Learning Outcomes
- Recognize the need for a foreign tax credit (FTC).
- Identify which taxes are creditable.
- Recognize the basic FTC limitation formula.
- Recognize how FTC carryback and carryforwards operate, including overall domestic losses (ODLs) and overall foreign losses (OFLs).
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