Form 1116 (employment) accrued foreign taxes

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oslocal
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Joined: Sat May 21, 2016 5:30 pm

Form 1116 (employment) accrued foreign taxes

Post by oslocal »

I have a tax liability from Norway that is split into:
National Insurance contributions (8.2%), progressive employment income tax (increases from 0-16.2%) and flat tax (22%)

The progressive employment income tax is levied on the full income with no allowable deductions.
The flat tax is a bundle of all income (both general income and passive income) and deductions (std. deduction, childcare deduction, capital losses etc.)

If I understand correctly:
- I cannot take a credit for the National Insurance contributions because Norway and the US has a totalization agreement (similarly no credit for FICA taxes on US income)
- I can include taxes accrued on the progressive employment income tax
- I need to allocate taxes accrued between my passive foreign source income and my general category foreign source income
- I can include somewhere between 0 and 22% credit for taxes accrued on the remainder - but how much?

For example there is a standard deduction that reduced taxable income.
I also have a sizable deduction from a capital loss that is recognized in Norway, but not in the US, which reduces my tax liability, but that is not related to the taxes accrued to any of the income from which I want to claim a credit. Can I ignore this when figuring taxes accrued?
Do I need to put these somewhere on form 1116 as well?
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