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Here is a common misconception about the foreign tax credit (FTC):

Here is a common misconception about the foreign tax credit (FTC):



Many people think that a foreign tax credit may only be claimed if there is a tax treaty between the US and that foreign country. This is 100% false. 



While tax treaties can provide additional benefits or clarify tax obligations, they are not a prerequisite for claiming a foreign tax credit.



Some tax professionals who do not specialize in international taxation may perpetuate this myth by suggesting that treaties are necessary for claiming credits, leading clients to believe they have no options when dealing with countries without treaties.



Another important point:



Tax treaties often specify which foreign taxes qualify for the FTC. 



But a taxpayer has no obligation to take a treaty based position if domestic law may be interpreted in a different way. They may disregard the treaty without having to explicitly challenge it.

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