# Foreign taxes paid Form1116 PartII



## crisvic (Jan 25, 2020)

Good afternoon...Really would appreciate your help with the following.
My understanding is that foreign taxes can only be claimed with foreign sourced income, not with U.S. sourced income. If for example a U.S. retiree in Spain has spanish SS benefits of $20000 and U.S SS benefits of $10000, he should only enter on form 1116 Part II, 66% of total taxes paid in Spain. Am I correct in this assumption? The foreign tax credit calculation is a different matter. This retiree just wants to make sure he arrives at a correct CARRYOVER. Thanks so much for your help. Cris


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## Moulard (Feb 3, 2017)

crisvic said:


> My understanding is that foreign taxes can only be claimed with foreign sourced income, not with U.S. sourced income.


In most circumstances yes. However if an income tax treaty re-sources income then you can also claim foreign taxes on US sourced income - its treated as a separate category of income and would have to be reported on its own Form 1116 (option f - Certain income re-sourced by treaty)



crisvic said:


> he should only enter on form 1116 Part II, 66% of total taxes paid in Spain.


No. I do not think so, I don't have the forms or instructions in front of me, but if my memory is correct you would report 100% in Part II 

The split of global income and foreign sourced income in Part I will then (subject to other income and the proportional split of taxes, deductions etc) should result in a limit of 66% or thereabouts


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## crisvic (Jan 25, 2020)

Moulard said:


> In most circumstances yes. However if an income tax treaty re-sources income then you can also claim foreign taxes on US sourced income - its treated as a separate category of income and would have to be reported on its own Form 1116 (option f - Certain income re-sourced by treaty)
> 
> 
> 
> ...


Thank you so much


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