In which of the following scenarios will a tax treaty benefit reduce the amount
ID: 2600748 • Letter: I
Question
In which of the following scenarios will a tax treaty benefit reduce the amount of Foreign Tax Credit available to a taxpayer?
A A taxpayer who recently became a U.S. citizen and receives retirement benefits earned in a foreign country.
B A U.S. nonresident alien student receiving rental income from property located in Brazil
C A foreign IT consultant who works in the U.S. for the 187 days during the tax year.
D A U.S. resident alien, working as a university professor in the U.S., who exempts $5,500 of U.S. source wages.
Explanation / Answer
A. A taxpayer who recently became a U.S. citizen and receives retirement benefits earned in a foreign country.
A tax treaty benefit will reduce the amount of foreign tax credit available to a taxpayer who is a U.S. citizen, as U.S. citizens are taxed on their global income.