確實有這麽個 limit，但比我的 Foreign Tax Credit 要高很多，可以當年全部減掉

幾萬刀 foreign tax credit，根本到不了那個 limit

Limit on the Credit

Your foreign tax credit cannot be more than your total U.S. tax liability multiplied by a fraction. The numerator of the fraction is your taxable income from sources outside the United States. The denominator is your total taxable income from U.S. and foreign sources.

 

Roughly:

Foreign Tax Credit Limit = Tottal Tax Liability * (Foreign Income / Total Income)

Let F = Foreign Income

Let T1 = US tax rate on F

Let D = Domestic Income

Let T2 = US tax rate on D

Foreign Tax Credit Limit = (F * T1 + D * T2) * F / (F + D) >= (F + D) * min(T1, T2) * F / (F + D)

So, Foreign Tax Credit Limit >= F * min(T1, T2)

Let Tf be the foreign tax on F then

Foreign Tax Credit = F * Tf

to me, Tf is (capital gain tax for selling house in China) about 6%, while T1 > 20% (including Medicare surcharge) and T2 > 30% (effective tax rate, not marginal tax rate, not sure how large is T2 but definitely above 30%)

When you sell house in Shanghai and you've hold the house for more than 5 year, you have the choice to pay tax 5% on total price, or 20% on the gain.  It is benificial to take 5% on total price.  My recollection could be off but that is the ballpark number.  I just take tax rate 6% on the gain as a ballpark number

Foreign Tax Credit ~= F * 6% 遠小於 F * 20% < Foreign Tax Credit Limit

If you are doing business or receive salary in China then that would be a different story, the Tf could be very high.  If Tf > max(T1, T2) you will definitely be hit by the limit.

If your foregin income is only from selling a house in China, it is unlikely you would be hit by this limit, if you have just a little bit of positive US source of income.

所有跟帖： 

• 如果美國收入稅率超過6%，很難想象中國賣房（持有5年以上）不能當年就把 foreign tax credit 全拿回來 -slow_quick- ♂ (0 bytes) () 11/04/2022 postreply 20:53:29

• 如果這還當年拿不回來，換 accountant 吧 -slow_quick- ♂ (0 bytes) () 11/04/2022 postreply 21:10:12

• 如果你在中國賣房的增值部分（很容易到百萬以上）超過美國收入的43%（美國收入少於2百多萬），也能拿回全部 -slow_quick- ♂ (0 bytes) () 11/04/2022 postreply 21:42:15