The answer is foreign tax credit. In order to reduce double taxation on income taxed in both the nation of source and the country of residence, some governments provide a foreign tax credit.
- More about foreign tax credit :
- No matter where you live, the United States taxes your worldwide income if you are a citizen. The U.S. allows you to claim a tax credit for foreign taxes you pay or accumulate in order to avoid double taxation.
- The foreign tax credit is available to both U.S. citizens and resident aliens who paid foreign income tax and are subject to U.S. tax on the same income. If a nonresident alien paid foreign income taxes related to a trade or business in the United States or was a legitimate resident of Puerto Rico for the whole tax year, they are eligible to claim the credit.
- This tax credit is typically only available for income, war profits, and excess profits taxes (together referred to as income taxes). Generally, the credit is available for foreign taxes paid on wages, dividends, interest, and royalties.
To know more about foreign tax credit, kindly click on the link below :
https://brainly.com/question/14364983?referrer=searchResults
#SPJ4