Waseem has $103,000 total taxable income,which includes $11,000 of taxable income from India.He paid $4,000 in foreign income taxes and his U.S.tax liability is $21,610.Waseem's foreign tax credit is: Do not round interim calculations)

Question

Quizplus · Accepted Answer

To calculate the foreign tax credit, we need to determine the total foreign taxes paid, and then compare them to the foreign-source income that was included in the taxpayer's total taxable income.

In this case, Waseem had $11,000 of taxable income from India and paid $4,000 in taxes to India. To figure out how much of his U.S. tax liability can be credited to foreign taxes, we need to calculate the ratio of foreign-source income to total taxable income:

$11,000 / $103,000 = 0.1068

This means that 10.68% of Waseem's total taxable income came from foreign sources. To calculate his foreign tax credit, we multiply his U.S. tax liability by this percentage:

$21,610 x 0.1068 = $2,308.29

Therefore, Waseem's foreign tax credit is $2,308.

Waseem Has $103,000 Total Taxable Income,which Includes $11,000 of Taxable