I’ve chosen to take a credit for foreign taxes accrued on Form 1116 in the past. Can I instead take a credit for taxes paid in the current year?
If you’re a cash basis taxpayer, you can only take the foreign tax credit in the year you pay the qualified foreign tax unless you elect to claim the foreign tax credit in the year the taxes are accrued. Once you make this election, you can’t switch back to claiming the taxes in the year paid in later years.
All About Randall Brody
Randall is the Founder of Tax Samaritan, a boutique firm specializing in the preparation of taxes and the resolution of tax problems for Americans living abroad, as well as the other unique tax issues that apply to taxpayers. Here, they help taxpayers save money on their tax returns.