Page 25 - International Taxation IRS Training Guides

Foreign
Tax Credit (FTC) Basics

(by citizenship or place of
 U.S. taxpayers

pay U.S. tax on worldwide income, but
incorporation)
also pay foreign tax where the income is earned
may

where the taxpayer is doing
(source country) or
has a subsidiary (residence country)
business or

 FTC alleviates
double taxation on foreign source

income to neutralize the effect
of tax considerations on
investment location

be an income tax, and must be
 Foreign tax paid must

compulsory.

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