Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 01-06-2014, 08:23 PM
Junior Member
 
Join Date: Jan 2014
Posts: 3
Company paid foreign taxes ....

I had international work in 2 countries and my company paid the income taxes directly to those countries for me and is paying a tax service to do my US taxes.

The duration of work was not sufficient to have any wages counted as foreign income (for US Tax purposes)

I believe the taxes paid by my company to these other countries should be converted to USD and included in my W-2 as 'other income'. If it is not included then the tax preparer cannot logically include a deduction for foreign taxes paid.

To me this seems logical, but in my experience accounting and taxes are not always as straight forward. I am just looking for clarification of the treatment of the foreign taxes as income or not.

Thanks!
Jon



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 01-07-2014, 08:06 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,230
Quote:
Originally Posted by bulldog8 View Post


#1;I had international work in 2 countries and my company paid the income taxes directly to those countries for me and is paying a tax service to do my US taxes.
The duration of work was not sufficient to have any wages counted as foreign income (for US Tax purposes)I believe the taxes paid by my company to these other countries should be converted to USD and included in my W-2 as 'other income'.


#2; If it is not included then the tax preparer cannot logically include a deduction for foreign taxes paid.

To me this seems logical, but in my experience accounting and taxes are not always as straight forward. I am just looking for clarification of the treatment of the foreign taxes as income or not.


Jon
#1;Then, you can claim the expense on Sch A of 1040 as long as you itemize deductions on your return; if not, you can’t claim the expenses. The only way to take advantage of the tax preparation deduction is to file itemized tax return.


#2;as mentioned above, then, the tax person needs to make sure that he does include the amount for tax preparation on the appropriate line when preparing the taxes. You, as a Taxpayer, who incurs fees from tax preparation can deduct those fees. The amount of the deduction may be small; however, that small deduction can move you down one or two tax brackets and thus save money



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 01-07-2014, 10:29 AM
Junior Member
 
Join Date: Jan 2014
Posts: 3
#1 & #2 were not a concern, but thanks for the clarification (They did not include tax prep services (paid by the Company) as other income either ...)

#3: I am just looking for clarification of the treatment of the foreign taxes as income or not.

- Jon



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #4 (permalink)  
Old 01-07-2014, 12:33 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,230
Quote:
Originally Posted by bulldog8 View Post

#3: I am just looking for clarification of the treatment of the foreign taxes as income or not.

- Jon
NOT as income; in genral, you have a choice as to whether you deduct any foreign taxes paid or accrued during the year as an itemized deduction on your Form 1040 Sch A on line 7 as other taxes, I guess, or as a credit using Form 1116 nd report in on 1040 line 47 I guess.. The choice needs to be made each year that you have foreign taxes and it can change from year to year. While you can choose whether to use a credit or a deduction year to year, you can't use some as a credit and some as a deduction in the same year. The IRS recommends filling out your taxes both ways to see which one provides you with the most benefit



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #5 (permalink)  
Old 01-07-2014, 02:05 PM
Junior Member
 
Join Date: Jan 2014
Posts: 3
Like I said - taxes and accounting sometimes are confusing to me ...

So to clarify with a very simple hypothetical situation. Say I earn 6k/month, and my company paid 5k in taxes to a foreign country. My filing would be:
1040 line 7 = 72,000
1040 lines 8-21 = 0 (no other income to make situation simple)
1040 line 22 = 72,000
1040 lines 23-36 = 0
1040 line 37 = 72,000 AGI
Standard deduction -5,800
taxable income 66,200
Taxes from table 12,600
Foreign Tax Credit 4,000 <- I can take credit for foreign taxes even
though I did not logically or physically pay
them .. +1,000 carry to over to the next year
Taxes due 8,600
Taxes withheld 13,600
Refund 5,000 <- My company paid my foreign taxes, and the
IRS gives this to me - what a deal!

So, as a hypothetical situation, I make out well ?!?

- JD



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
How does a Partnership pay the Foreign Withholding Taxes attributable to Foreign Partners? TaxGuru Limited Liability Company 0 05-06-2013 02:47 PM
What IRS Forms are used to report federal income taxes paid on behalf of these Foreign Partners? TaxGuru Limited Liability Company 0 05-06-2013 02:38 PM
Can I take foreign tax credit or deduct taxes paid on foreign investments in IRA? jswift IRA/Sep 0 02-14-2010 02:03 AM
Buying a foreign company to be a subsidary AT22278 Limited Liability Company 0 12-17-2009 03:03 AM
Why Taxpayers should review State Taxes paid in 2007 versus Sales Taxes Paid in 2007? TaxGuru Itemized Deductions 1 03-04-2008 08:18 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning