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How to take Credit for Tax paid on Wages in Germany

Forum|Forum|3 years ago
March 8, 2023
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We moved to Germany this year.

We do not qualify for the exclusion on foreign income and want to take the credit for Foreign Tax Paid on foreign wages.

Where i should be able to claim the foreign taxes is here: Deductions & Credits -> Estimates and Other Taxes Paid -> Foreign Taxes

However, going through the Foreign Tax interview there seems no option to enter my taxes. Only option available seems on foreign taxes paid on Form 1099DIV/INT.

Question:

Where exactly do I enter in the Foreign Tax interview my Foreign Tax Credit paid on Foreign wages?

See steps below offered in TurboTax below on Foreign Tax Credit.

Best answer by pk12_2

Hi AbrahamT,

Thanks for your support! Here my answers:

a) 2000

(b) US Citizen who moved in 2022 to Germany

(c) Working for German Company in Germany (not the US Government)

Best,

TomW2022

@TomW2022 , thank you for your answers to my questions. This throws a complete new light on the issue at hand.

Assuming that you entered Germany in 2022 ( let us assume July 1st of 2022), being a US person ( US citizen/ Green Card ), you are taxed on your world income and thus your German income comes under the purview of US tax laws.

To ameliorate the effects of double taxation of your German income in 2022 ( it is classed as Foreign Earned Income ), you have the following options --- (a) Foreign Earned Income Exclusion -- you have to meet Physical Presence Test ( 330 days abroad with a test period of continuous 12 months, have a foreign tax home etc. ) or Bonafide Resident ( requires IRS approval ); (b) Foreign Tax Credit OR (c) Foreign Tax deduction if you itemize.

Generally most Expats, use the Foreign Earned Income Exclusion --- but this means you cannot file till you meet the Physical Presence Test ( in our example above , you wait till June 30th 2023, when you meet the first possible 12 month test period ). This will ten allow you to exclude most of your foreign earned income from US taxes.

Does this make sense --- and is there more I can help you with ?

pk

A

AbrahamT

After you get to the screen where you last entered Germany, you will hit continue, continue, continue

until you get to the screen I just illustrated for you.

Thank you.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

P

pk12_2

Employee

@TomW2022 , reading through all the detailed process by @AbrahamT , I am still left with a few more questions --

(a) when did you come to US

(b) are you a US person ( citizen / GreenCard ) that is returning to USA or foreign person that is starting employment / living in the USA?

(c) If you are not US person , then are you a citizen of Germany and were you working there for the US govt etc. or for a local entity?

I ask these questions because from what you posted I want to be sure that 1. you actually should report your German wages and 2. that you are or are not eligible for Foreign Earned Income Exclusion.

I will circle back once I hear from you --yes ?