W, a U.S.citizen, earned $6,000 from foreign sources on which she paid tax of $1,200 to the foreign government.W's U.S.tax was $4,000, $1,500 of which was on the foreign income.W must pay $2,800, after the foreign tax credit, to the United States.

Question

Quizplus · Accepted Answer

W can claim a foreign tax credit for the $1,200 paid to the foreign government, reducing her U.S. tax liability on the foreign income from $1,500 to $300. Her total U.S. tax, after the foreign tax credit, is $2,800 ($4,000 total U.S. tax - $1,200 foreign tax credit).

W, a USCitizen, Earned $6,000 from Foreign Sources on Which She Paid