Complicated foreign tax credits
The United States allows US companies that pay income taxes to other countries on foreign earnings to credit the taxes paid against any US taxes that must be paid on the same income. However, the foreign tax credit rules are full of fine print. It can be hard for US taxpayers to benefit from foreign tax credits.
The IRS issued new foreign tax credit regulations in December.
John Harrington, a lawyer with Dentons, wrote, after working through the new regulations, that saying US companies have to jump through numerous hoops to claim foreign tax credits is “an understatement comparable to saying ‘Odysseus had some trouble getting home from Troy.’”