Stocks & Bonds:

Tax Credit on Foreign Taxes on Overseas Investments

If your client paid anything over $300 (for a single filer) and over $600 (for a joint filer) in foreign taxes, they have to file Form 1116 with the IRS. But if they paid less then these amounts in foreign taxes, they can claim them as tax credit on their Form 1040 without filing the form.

This was done to make it easier on the small investors who were reluctant to fill out the complicated Form 1116.

The great advantage of a tax credit is that it’s dollar for dollar, meaning its money in your hand.