Reclaimable Foreign Tax Credits: Calculating and Applying for Refunds of Excess Withholding by Foreign Payors

Investors in other countries are often eligible for lower treaty rates on their investments, while the country where the investment is held subjects the investment--usually dividends--to tax at high statutory rates. The confusion surrounding this withholding leaves sizeable refunds on the table. Many investors trust their broker will apply for the refund. Others erroneously believe they can take a foreign tax credit for the overpaid withholding. However, brokerage statements may simply report the reclaimable foreign taxes, and the IRS disallows foreign tax credits for foreign taxes paid that are eligible for refund.

Further complicating the recovery of these taxes is the overall complexity of foreign taxes. These taxes are country-specific and assessed at varying rates with various application processes. As countries grapple to find more revenue and investors step up investments abroad, the number and amounts of these excess payments continue to increase. Some investors choose to engage third-party providers to manage these repayments. International tax advisers must understand the steps needed to seek refunds of excess amounts withheld.

Listen as our international tax expert analyzes the concept of reclaimable foreign tax credits and how taxpayers can obtain these valuable refunds.

1. Reclaiming foreign tax credits: an introduction
2. Foreign tax credit rules and current legislation
3. The broker's role in FTCs
4. Steps to seek refunds of excess taxes withheld
5. Practical tips and best practices

Our panelist will cover these and other critical issues:

• Foreign tax credit rules and recent legislation
• Steps to take to seek a refund of excess taxes withheld by a foreign payor
• What is a reclaimable foreign tax credit?
• Examples of the process to reclaim foreign tax credits in specific countries
• How U.S. income tax treaties affect foreign tax credits

Learning Objectives

After completing this course, you will be able to:

• Identify reclaimable foreign tax credits
• Determine the basics of the applicable process for reclaimable FTCs in specific countries
• Decide what amount of taxes paid can be reclaimed
• Ascertain differences in foreign withholding eligible for the FTC and those that can be reclaimed

• 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).