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A U.S. credit for income taxes paid to another country, reducing double taxation.
The foreign tax credit lets U.S. taxpayers offset their U.S. tax with income taxes already paid to a foreign government on the same income, claimed on Form 1116. It is the main tool that prevents the same income from being fully taxed twice when you have cross-border earnings or investments. It is a credit, so it reduces tax owed dollar-for-dollar, subject to limits.
Tax withheld on Indian NRO interest can often be claimed as a U.S. foreign tax credit.
Returning to India after a decade in the US involves winding down a complex web of US accounts, assets, and tax obligations — while building a parallel financial life in India. Here is how to plan it.
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