Foreign Tax Deduction
Foreign taxes are deductible from your U.S. income tax return only if the foreign source has an international tax treaty with the United States.
In most cases, the foreign tax credit will provide greater benefits than the deduction. However, the deduction may be more advantageous if the foreign tax rate is high and only a small amount of foreign income relative to domestic income has been received. If the foreign tax deduction is taken, it is reported on Schedule A of the 1040, and the credit can be claimed by filling out Form 1116.
For more information, see IRS Publication 514.
Investment dictionary. Academic. 2012.
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