Rolling over foreign tax credits?
Jan 27th 2019, 6:59 pm
#1
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Location: Nottingham UK to Boston MA to Orlando FL
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Rolling over foreign tax credits?
My 2017 tax return was my first in the US as I moved here mid-year and therefore had to report both my UK and US incoming for the year as a resident alien.
My UK income was over the pro-rata threshold of what I was able to claim credit against, and I remember Deloitte telling me that I could use the remaining UK income to claim FTCs against the following year.
My question is; can I only use this against any 2018 foreign income (of which I have none) or can I apply it to my US income?
My UK income was over the pro-rata threshold of what I was able to claim credit against, and I remember Deloitte telling me that I could use the remaining UK income to claim FTCs against the following year.
My question is; can I only use this against any 2018 foreign income (of which I have none) or can I apply it to my US income?
Jan 27th 2019, 7:36 pm
#2
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Re: Rolling over foreign tax credits?
I understood that could only apply against foreign earnings. I would have to go dig up my past returns, but I am fairly sure I used it a lot of foreign tax credits I had been carrying over for several years when I sold my UK isa’s. Which helped reduce my us tax liabilities as UK ISA gets no tax relief for US persons.
Jan 28th 2019, 2:11 pm
#3
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Re: Rolling over foreign tax credits?
I understood that could only apply against foreign earnings. I would have to go dig up my past returns, but I am fairly sure I used it a lot of foreign tax credits I had been carrying over for several years when I sold my UK isa’s. Which helped reduce my us tax liabilities as UK ISA gets no tax relief for US persons.
Jan 28th 2019, 3:31 pm
#4
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Re: Rolling over foreign tax credits?
I confirm the same. I was in a similar postion a few years back and I only could offset these credits against my UK rental income.
Jan 28th 2019, 4:21 pm
#5
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Re: Rolling over foreign tax credits?
Would have to look at a return, but I believe the carryover is up to 10 years on a rolling basis and it’s used FIFO.
Jan 29th 2019, 10:25 pm
#6
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Re: Rolling over foreign tax credits?
We are in a similar position. A tax credit from our move (UK to US) has been listed on our tax return for the past 7 years, carrying forward each year. It was our understanding that you could only offset it against foreign income however, it cannot be offset against any income it needed to be be offset against foreign earned income (not passive). We have rental and investment income in the UK but have not been able to offset against these. Perhaps we need to look into this again as we did not realize it ran out after 10 years.
Jan 30th 2019, 12:31 pm
#7
DE-UK-NZ-IE-US... the TYP
Joined: Mar 2010
Posts: 2,855
Re: Rolling over foreign tax credits?
We are in a similar position. A tax credit from our move (UK to US) has been listed on our tax return for the past 7 years, carrying forward each year. It was our understanding that you could only offset it against foreign income however, it cannot be offset against any income it needed to be be offset against foreign earned income (not passive). We have rental and investment income in the UK but have not been able to offset against these. Perhaps we need to look into this again as we did not realize it ran out after 10 years.
Carryback and Carryover of Unused Credit
If you can't claim a credit for the full amount of qualified foreign income taxes you paid or accrued in the year, you're allowed a carryback and/or carryover of the unused foreign income tax. You can carry back for one year and then carry forward for 10 years the unused foreign tax. For more information on this topic (including taxes paid or accrued in years before 2007), see Publication 514, Foreign Tax Credit for Individuals.https://www.irs.gov/taxtopics/tc856
