taxing income in another country

[hurricanemd]

I have FD in India which will be taxed at source at 10% and 30% in different banks, if i am in the 33% bracket in US , then I will have to pay ( 33-10) 23% and (33-30) 3% extra on my tax return filed in US ( since i will get credit for the tax i pay in india)
Am i correct in assuming this
feedback appreciated

 

[dms1]

I have FD in India which will be taxed at source at 10% and 30% in different banks, if i am in the 33% bracket in US , then I will have to pay ( 33-10) 23% and (33-30) 3% extra on my tax return filed in US ( since i will get credit for the tax i pay in india)
Am i correct in assuming this
feedback appreciated

Not necessarily. All the foreign income has to be included in your gross income and it is this figure that is used to calculate the US taxed owed. You then deduct the tax already paid in India from this figure. If, for example, your Indian interest income pushed your gross income into the 38% tax bracket then your assumption would not hold.

 

[TheRealCanadian]

If, for example, your Indian interest income pushed your gross income into the 38% tax bracket then your assumption would not hold.

Not completely, but partially. Some income would be taxed at (33-foreign_tax_rate), and some would be taxed at (38-foreign_tax_rate).

 

[hurricanemd]

So is what i wrote right

As long as my total gross income stay in 33% bracket when i include the indian income to the US income, I will have to pay (33%- foreign tax interest)

 

[atrayapr1]

In general what you wrote is correct for a simple FD, but there are limitations to foreign tax deduction. Also remember that you are on the hook for several capital gains taxes which are not covered by tax treaties. So if you sell your house in India, you may be liable for taxes though you did not make any profit from the sale. So if you have any financial transaction in India other than a simple bank account, just contact a CPA.