A Primer on How to Be Tax-Smart with Your Foreign Income
Do you own stocks, bonds, or mutual funds? If so, you may well have some foreign holdings such as BMW (German), or BP (British), or Nestle (Swiss). This means you have paid foreign taxes on the income you earned. Would you like to avoid being taxed on that income a second time? You may be able to accomplish this goal if you claim a credit or deduction on your U.S. tax return. Don’t count on your tax preparer or preparation software doing this optimally for you.
The information below applies to almost all U.S. investors since most hold foreign stocks in their U.S. mutual funds. Read on to learn how to be more tax-efficient with your foreign income.