Avoiding Foreign Tax Credit Errors and Maximizing Opportunities: Maximizing the FTC

Utilizing foreign tax credits is critical to avoid double taxation of Individual taxpayers working, investing, or living across international borders. In addition to common errors, which could include applying the credit to ineligible taxes, improper completion of Form 1116, Foreign Tax Credit, or miscalculations, are overlooked opportunities to increase the benefit of the foreign tax credit.

Too often, tax preparers routinely take advantage of the foreign earned income exclusion under IRC Section 911 and fail to consider the higher tax rates imposed by other countries. Additionally, many circumstances warrant taking a deduction for foreign taxes. Here too, practitioners sometimes fail to realize foreign income taxes are not subject to the $10,000 tax deduction cap. International tax practitioners must understand key considerations when applying for these credits.

Listen as our panel of international tax experts explores the errors and oversights to avoid when calculating foreign tax credits for international taxpayers.

1. Foreign tax credits: introduction
2. Qualified foreign taxes
3. Deduction vs. credit
4. Paid vs. accrued
5. Utilizing carrybacks
6. Interaction with Section 911, foreign earned income exclusion
7. Other considerations

The panel will cover these and other critical issues:

• Common errors made when completing Form 1116
• Comparing the benefits of the foreign earned income exclusion and the foreign tax credit
• Circumstances where the foreign deduction is more valuable than the foreign tax credit
• Choosing the paid or the accrual method for foreign taxes
• Taking advantage of creditable foreign tax carryovers

Learning Objectives

After completing this course, you will be able to:

• Identify taxes eligible for the foreign tax credit
• Determine how the Section 911 foreign earned income exclusion interacts with the foreign tax credit
• Ascertain when electing accrued rather than paid foreign taxes could benefit a taxpayer
• Decide when a foreign tax deduction may be more valuable than a foreign tax credit

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of international taxation including residency determination, foreign entity classifications, application of treaty benefits, as well as GILTI, Subpart F, and the related Section 250 deductions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).