Who is eligible for foreign tax credit?

Generally, only income, war profits, and excess profits taxes (collectively referred to as income taxes) qualify for the foreign tax credit. Foreign taxes on wages, dividends, interest, and royalties generally qualify for the credit.

How do I report foreign subsidiary income?

Form 1120-F is used to report income, gains, losses, deductions, credits, and to calculate the U.S. income tax liability of a foreign corporation. It is also used to claim any refund that is due, to file a treaty-based position on Form 8833 or to calculate and pay branch profits tax liability.

Can individuals take foreign tax credits?

You can claim a credit only for foreign taxes that are imposed on you by a foreign country or U.S. possession. Generally, only income, war profits and excess profits taxes qualify for the credit. If you do take the credit, one or both of the elections may be considered revoked.

How does foreign tax credit work in Canada?

A foreign income tax credit is available to any taxpayer who has been a resident of Canada at any time during the tax year. The amount of foreign income tax you claim is equal to the lesser of the foreign income or profits tax you paid or the amount of Canadian income tax you would otherwise pay on the foreign income.

Can a foreign corporation file 1120?

Even if foreign corporations do not have a US source of income or all income is exempt from tax under a tax treaty, they must file Form 1120-F if they engage in a trade or business in the US. The criteria for being required to file Form 1120-F are: The corporation was engaged in trade or business in the US.

Does Canada recognize US LLCS?

Since Canada treats a US LLC as a non-resident corporation, it is usually not a good idea to own personal property – such as vacation property – through such a vehicle. Canada will take the view that the US LLC will have conferred a shareholder benefit on the ultimate individual “shareholder(s)” of the LLC.