Domestic corporations that have paid or accrued qualified foreign income taxes to a foreign country or U.S. possession may generally credit those against their U.S. income tax liability on foreign source income.
The goal of the foreign tax credit is to keep a U.S. taxpayer’s worldwide effective tax rate from exceeding the U.S. statutory tax rate, which is accomplished through the foreign tax credit limitation.
You can claim a credit only if your foreign taxes are qualified:
The tax must be imposed on you: you can claim a credit only for foreign taxes that are imposed on you by a foreign country or U.S. possession.
You must have paid or accrued the tax: You could claim a credit only if you paid or accrued the foreign tax to a foreign country or U.S. possession.
Your qualified foreign tax is only the legal and actual foreign tax liability that you paid or accrued during the year. The amount of the foreign tax that qualifies for the credit must be reduced by any refunds of foreign tax made by the government of the foreign country or the U.S. possession.
To be eligible for the credit, te foreign levy must predominantly have the nature of an income tax in the U.S. sense.
Corporations use Form 1118 to compute their foreign tax credit for certain taxes paid or accrued to foreign countries or U.S. possessions.
The foreign tax credit is calculated as follows:
Step1: Determine the qualified foreign income taxes paid or accrued for the tax year.
Step2: Compute the foreign tax credit limitation. This is done by multiplying the amount of pre-credit U.S. tax paid in a year by the ratio of foreign source taxable income earned to income earned from both foreign and domestic sources (worldwide taxable income).
Step3: Determine the lesser of qualified foreign taxes paid (step 1) or the foreign tax credit limitation (step 2).
Any unused foreign tax credits can be carried back one year and then carried forward for 10 years.
All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage.
Voting rights pertain to the entitlement of corporate shareholders to participate in decisions regarding corporate policies. Typically, only shareholders of record have the privilege to vote either in person or through a proxy (unless they possess non-voting shares) during a shareholders' assembly. The corporate records will list the owners of all outstanding shares, along with the record date preceding the meeting.
With the establishment of Economic Nexus, many states have enacted Marketplace Facilitator Acts (MFAs) that require some Marketplace Facilitators to be responsible for collecting and remitting sales tax on behalf of remote sellers. Marketplace Facilitators generally are required to obtain a seller’s permit or register a seller's sales tax number firstly for a marketplace or platform’s seller in a particular state
Before Sales Tax Reform, a seller must have a “taxable nexus” in a state before the state can require the seller to collect and remit sales and use tax. Therefore, remote sellers should also be considered physically present to be subject to sales tax. For example, having an office or other place of business in the state, hiring employees in the state, or holding a property in the state.
Nearly 35 million Americans were 65 or older in year 2000，and the average American, according to the U.S. Census Bureau retires at age 63. As the minimum guaranteed system of federal pensions (Social security payment) led by the US government has gradually weakened in recent years, the US pension market is mainly dominated by the social security system, which gradually favors the savings pension insurance dominated by individuals and enterprises.
