Seeking Guidance on Claiming Foreign Tax Credit in India with US FEIE
I worked in the US for 3 years and returned to India last year. For the FY 22-23, I qualify as a Resident and Ordinary Resident (ROR) in India. In the tax year 2022, I have salary income from both the US and India.
I am planning to file a resident tax return (1040) in the US through a CPA, utilizing the Foreign Earned Income Exclusion (FEIE) to exclude the salary income earned in India and reduce my US tax liability.
Since I am an ROR in India, my salary income from the US will be taxable in India.
My question is:
Can an Indian CA claim Foreign Tax Credit (FTC) in India for the taxes paid in the US if the FEIE is claimed in the US? Are there any reasons why the FTC in India would not be applicable in my case?
I want to ensure that I receive the maximum tax relief and avoid any potential partial tax benefits. As I am still finalizing my tax filing approach, I would greatly appreciate clarification on how to optimize my tax returns.
Asked 6 months ago in Income Tax
Thank you every for taking the time to respond.
Want to add some details based on the answers:
- Reason for filing as a resident in the US is a pending green card application.
- Due date is June 15 (according to US tax law) for those who do not reside in the US.
- Filing as single (unmarried)
Based on tie-breaker rules, I am considered resident in India. For India, I will definitely be filing as resident.
I can still file as resident in the US, right? Please clarify whether this assumption is correct or not.
@Prerna Peshori my employer has already determined this. I am considered resident in India. As per DTAA tie-breaker rule too, I will be considered resident in India.
Asked 6 months ago