IRS Publication 514


DEFINITION of 'IRS Publication 514 '

A document published by the Internal Revenue Service that provides tax guidance for individuals who paid tax on income to a foreign country and may be liable for taxes on that same income in the United States. Workers may be able to include taxes paid to foreign governments as an itemized deduction, or may be eligible for a tax credit. Just as income earned in the United States is subject to regular income tax, it is also subject to alternative minimum tax (AMT).

BREAKING DOWN 'IRS Publication 514 '

When taken as a tax credit, foreign taxes may reduce the taxpayer's U.S. tax liability, while taking them as a deduction reduces the income subject to income tax. The taxpayer can either take a deduction on all foreign taxes or a credit - not a combination of the two. It is the taxpayer's choice as to which option is used.

  1. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
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    A tax that governments impose on financial income generated by ...
  3. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
  4. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  5. Itemized Deduction

    A deduction from a taxpayer's taxable adjusted gross income that ...
  6. Crowding Out Effect

    An economic theory stipulating that rises in public sector spending ...
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