What does Foreign Tax Credit mean?
Foreign Tax Credit is a U.S. tax provision that allows individuals and companies to offset the taxes they’ve paid to foreign governments against their U.S. tax liability. This credit helps to prevent double taxation on foreign-earned income. In the entertainment industry, actors, directors, and crew members working internationally can take advantage of the Foreign Tax Credit to reduce their U.S. tax burden based on taxes paid in the country where they worked.
Example:An American director working on a film project in Australia claims the Foreign Tax Credit to reduce their U.S. tax liability by offsetting the taxes paid in Australia.
Example: A U.S. actor who worked on a European film applies for the Foreign Tax Credit to avoid paying taxes twice on the same income earned abroad.
Did You Know?
The Foreign Tax Credit can be used to reduce U.S. tax liability for taxes paid to over 190 foreign governments around the world!
