# Capital Gains Foreign Tax Credit for Investments held in the USA



## plmkw (Mar 14, 2021)

Hello,

I moved from the USA to Poland a few years ago. I had lived in the USA for a long time before moving and have a stock brokerage accounts in the USA that pays me Dividends, Distributions, and in some cases when i sell stock it generates capital gains. I receive forms 1099-B and 1099-DIV every year. I report those in my USA taxes.

I currently take the FEIE which allows me to exclude most of my salaried income, and the remaining salaried income as well as the amounts in the 1099-DIV and 1099B are small enough that it gets covered by the standard deduction (Family) and I still have a buffer of about $9000 USD. Thus, i have not had to pay any taxes in the USA yet. 

Poland taxes me on worldwide income, hence I pay a 19% tax on all Dividends, Distributions, and Capital gains that i make from the brokerage account in the USA. I have been very hesitant to sell more stock because of the fear of complicating my taxes in the USA and exceeding the buffer that the standard deduction gives me.

The questions I have are:

1. If I sell stock in the USA and it causes me to end up exceeding the FEIE + Standard deduction, can i take the Foreign Tax Credit for the 19% income taxes i pay in Poland for the capital gains?

Hypothetical example below:

Salaried income = 115,000 USD (Taxed in Poland @15%)
FEIE = 107,600 USD
Capital Gains from USA = 20,000 USD
Standard Deduction = 24,800

Any help would be greatly appreciated, mainly trying to plan out year 2021


----------



## Bevdeforges (Nov 16, 2007)

plmkw said:


> 1. If I sell stock in the USA and it causes me to end up exceeding the FEIE + Standard deduction, can i take the Foreign Tax Credit for the 19% income taxes i pay in Poland for the capital gains?


Basically, your stock gains and losses cannot go onto the FEIE form. That is only for "earned income" like salary and wages. Investment gains and losses are always separate and given that you will be paying Polish taxes on your investment income, you then claim credit for taxes paid in Poland (only on investment income and gains) against whatever the US taxes on them turns out to be. Form 1116.


----------



## plmkw (Mar 14, 2021)

Thank you! for your help, truly appreciate it.


----------

