Foreign tax deduction,
Definition of Foreign tax deduction:
A type of itemized deduction that is allowed to be taken for the taxes that are paid to a foreign government. Usually these are classified as a withholding tax. This deduction is typically taken instead of taking a foreign tax credit, especially is the foreign tax deduction is more beneficial to the taxpayer.
The foreign tax deduction is one of the itemized deductions that may be taken by American taxpayers to account for taxes already paid to a foreign government, and are typically classified as withholding tax.
The foreign tax deduction is usually taken in lieu of the more common foreign tax credit if the deduction is more advantageous to the taxpayer than the credit.
How to use Foreign tax deduction in a sentence?
- The goal is to prevent American citizens from being subject to double taxation for the same income.
- The foreign tax deduction allows American taxpayers to reduce their taxable income by a portion of the amount of income tax paid to foreign governments.
- The foreign tax deduction would be taken instead of the foreign tax credit, given that the deduction is more advantageous for a taxpayer.
Meaning of Foreign tax deduction & Foreign tax deduction Definition