When completing your US tax return, you should report only the Net Foreign Taxes Paid, that is, the total foreign income taxes you actually paid after subtracting any refunds you received or expect to receive from a foreign government.
Who This Applies To
- US citizens and Green Card holders earning income abroad, reporting foreign income taxes on Form 1040
- Taxpayers claiming the Foreign Tax Credit (Form 1116)
Example
- You had €10,000 withheld as income taxes on your salary.
- You filed a local tax return and expect a €2,000 refund.
In this case, you should report €8,000 (€10,000 − €2,000) as your Net Foreign Taxes Paid in the relevant section of your MyExpatTaxes profile.
Key Points to Remember
- Do not include refunded taxes as part of your paid foreign taxes.
- Report only the net amount you actually paid after accounting for any refunds.
- Reporting the correct net amount ensures accuracy when claiming the Foreign Tax Credit (Form 1116).
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