What is the taxation of foreign profits?

The taxation of foreign profits in California is determined by the Internal Revenue Service (IRS). Generally speaking, foreign profits, also known as income received from sources outside the United States, are taxable by the IRS. Foreign profits made by a United States citizen will be subject to US tax laws and any applicable state laws. Foreign income must be reported on an individual’s federal tax return. In some cases, the profits may also be subject to an additional state tax, such as in California, depending on the specific circumstances. In order to determine the amount of taxation on foreign profits, a taxpayer must use the federal income tax rate of the country in which the business or investment income was earned. The international tax law is complex, and there may be tax credits available, depending on the country in which the income was earned. Taxpayers may also be able to reduce their tax liability on foreign profits by making use of foreign tax credits. If a taxpayer has paid taxes to a foreign government on their profits, a credit may be available for the portion of taxes paid to the foreign government. Ultimately, the taxation of foreign profits is a complex and ever-changing area of international tax law. For more information and specific guidance, taxpayers should speak with a tax professional familiar with California and international tax law.

Related FAQs

What is a Permanent Establishment (PE) and how is it taxed?
What is the taxation of foreign profits?
What are the specific regulations associated with cross-border financial transactions?
How do governments track and enforce international taxation?
What is the taxation of foreign financial assets?
How does taxation of foreign investments work?
How has the globalisation of markets impacted international taxation?
How do governments apply transfer pricing rules?
How do countries agree on cross-border tax treaties?
How do governments combat tax avoidance by multinational corporations?

What is the taxation of foreign profits?

Related FAQs

Related Blog Posts