Are payroll taxes excluded from the Foreign Tax Credit? Maybe.

Are payroll taxes excluded from the Foreign Tax Credit? Maybe.

For more commentary and insight on this decision see Part II: https://youtu.be/8pjykNCAYk8 The answer to this question is "it depends." If the country you are paying payroll taxes includes payroll taxes into the Totalization Agreement, you likely will not get a credit for those payroll taxes. If on the other hand, if payroll taxes are not included in the Totalization Agreement, they will likely be allowed as a credit. A Totalization Agreement is like a tax treaty but it involves social security so it is the Social Security Administration makes a quasi-treaty with other countries involving social security like payroll taxes. The US-France Totalization Agreement can be found here: http://ift.tt/2aPIhIH So how does it work in real life? In this video, we discuss a recent DC Circuit Court case, Eshel V Commissioner and lay out the facts why the Tax Court held that the French Payroll taxes were not allowed as a credit. @IRSMedic http://youtu.be/1LZfcj3Ffrw IRS Medic