Chronicles of Tax Advisors
The foreign tax credit offers substantial tax savings when it is calculated properly. Sure, there are many twists and turns in the calculation of the foreign tax credit. If done properly, however, it can substantially reduce or even eliminate your personal income tax liability, and it can work against even self-employment tax. Normally, if you are a small business owner, the credit will not reduce any self-employment tax calculated on your profit. If you are working in a country with a ‘totalization agreement’, however, even self-employment tax can also be substantially reduced or eliminated.
In one case, we had an individual visit our office who had worked most of her three prior three years in various foreign countries. She had paid substantial foreign income tax to those foreign countries. By careful application of the tax law, we were able to generate refunds for her of over $100,000 for the years 2012 and 2013. We see an even larger tax refund for her for 2014.
Many taxpayers who pay substantial foreign tax yet fail to fully take advantage of the credits available for them in any given year don’t realize they can AMEND their tax returns as far back as ten years. This means that taxpayers can go back TEN years and capture all the refunds they are due. At Tax Advisors, we put our expertise at work for you and make sure you receive all the refunds you are entitled to.
Dave Motes, CPA
Authorized to practice before the Internal Revenue Service
A Certified Public Accountant (CPA) is a federally authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audit, collections, and appeals.