US IRS rules, regulations and laws, for US Citizens, Americans, green card holders, and nonresidents living abroad or moving to the US or out of the US.... valuable information on IRS rules concerning U.S. expatriates and their tax returns, and tax planning.... by an experienced International Tax Attorney
What Foreign Taxes Qualify for the Foreign Tax Credit.... and other rules on foreign tax credits
Generally, the following four tests must be met for any foreign tax to qualify for the credit:
The tax must be imposed on you
You must have paid or accrued the tax
The tax must be the legal and actual foreign tax liability
The tax must be an income tax (or a tax in lieu of an income tax)
Tax Must Be Imposed on You
You can claim a credit only for foreign taxes that are imposed on you by a foreign country or U.S. possession. For example, a tax that is deducted from your wages is considered to be imposed on you.
A foreign country includes any foreign state and its political subdivisions. Income, war profits, and excess profits taxes paid or accrued to a foreign city or province qualify for the foreign tax credit.
For foreign tax credit purposes, all qualified taxes paid to U.S. possessions are considered foreign taxes. For this purpose, U.S. possessions include Puerto Rico and American Samoa.
Tax Must Be Paid Or Accrued
You can claim a credit only if you paid or accrued the foreign tax to a foreign country or U.S. possession.