Us Foreign Tax Credit

[lauBA]

Does anyone have any experience filing the foreign tax credit (line 47, form 1116) on the 1040?

I worked half the year in Argentina and half the year in the US. Do you know if it is worth figuring out the foreign tax credit or should I just file the 1040EZ?

Thanks!

 

[citygirl]

Did you pay taxes in Arg? At 6 months, you won't meet the physical residency test to claim the exemption and it doesn't sound like Argentina is your tax home either.

 

[lauBA]

Im sorry, let me clarify. I was living in Argentina for 3 years. During 2012, I lived there for 8 months. I had work "en blanco" and paid Argentina taxes. Now I am living and working in the US.

 

[citygirl]

Im sorry, let me clarify. I was living in Argentina for 3 years. During 2012, I lived there for 8 months. I had work "en blanco" and paid Argentina taxes. Now I am living and working in the US.

Got it. It's a little complicated. 8 months still isn't enough to meet the requirements for a full year of bona fide residence. Did you meet the 330 days of physical presence in a 12 month period (which doesn't have to be in a calendar year)? However, that might entail ammending your '11 tax returns.

Pay an accountant to do for you, probably the easiest thing. Esp if it's a decent amount of money that you earned, you don't want to pay taxes on it again in the US after already paying taxes on it in Arg.

 

[lauBA]

Citygirl, thanks for your help. Yes, I think I am going to have to amend my 2011 taxes. Going with an accountant might be the easiest but since it wasn't that much money I will have to see if it is worth it. Thanks!

 

[citygirl]

If you need one, I can pass along my accountants info. He only charges $250 USD and files for you. It makes life so much easier

 

[arlean]

Citygirl, I would like your accountant person info if you would please include me. You sound like a smart gal to me and if you like him that speaks well for him to me. I don't need him personally but often have people ask me for recommendations and I could use the info on a good accountant. Thanks, and thanks for your contributions to the forum. You're appreciated!

 

[PalermoDano]

IMHO it would be best to file for the credit and amend previous returns if you have not declared your forgin income.

All worldwide income is required to be reported to the IRS regardless of whether you are exempt from paying income tax due to you overseas residency.

90%+ foreign tax paid on income can directly offset any tax liability you have on your US taxes owed.

If you previously filed your foreign income it would be a red flag if you fail to for last year and even if it is only a small amount as you state it could come back to haunt t

 

[PalermoDano]

IMHO it would be best to file for the credit and amend previous returns if you have not declared your forgin income.

All worldwide income is required to be reported to the IRS regardless of whether you are exempt from paying income tax due to you overseas residency.

90%+ foreign tax paid on income can directly offset any tax liability you have on your US taxes owed.

If you previously filed your foreign income it would be a red flag if you fail to for last year and even if it is only a small amount as you state it could come back to haunt you down the line.

Cheers