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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4194
Experience:  FCCA FCMA CGMA ACIS
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is there a double tax relief available for u.s. state tax paid

Customer Question

is there a double tax relief available for u.s. state tax paid (Massachusetts) as well as federal tax paid? also with the u.s. tax return system running on a 31.12. year end rather than a 5/4 year end how is the best way to claim the double tax relief ? i.e. all income for the y/e 31.12.2012 (& state + federal tax)entered on u.k. tax return to 5/4/13 or what was received on an actual basis (but..........I won't know the matching u.s. federal and state tax on a 5/4 basis)
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

Double taxation agreements do apply to Massachusetts, but you have to clear the Federal Taxation position first; there the credit is definitely allowed. The balance of any tax credit from the UK can then be applied to the Massachusetts tax levied. I have assumed from your question that you are referring to moneys coming in from the UK.
Customer: replied 3 years ago.

Hi Keith, Sorry you've interpreted the question "the wrong way round". It's a U.k. resident for 2012/13 returning into the U.K. & filing in a U.K. tax Return (returned to U.K. appx 1.7.2012) . There was substantial U.S. income (with federal & state tax paid) for the u.s. tax return to 31/12/2012. On the U.K. tax return it's what to enter, either 1. 3/4 x year end return to 31.12.2012 plus actually received 1.1.2013 to 5/4/13 ............but then how much u.s. (state + federal) to put down i.e. 3/4's (up to 31.12.2012) .but don't know u.s. tax on the period 1.1.2013 to 5.4.2013 OR just enter all of US tax return (for US income & taxes) for their year to 31.12.2012 on the UK return to 5.4.2013 ?

Expert:  bigduckontax replied 3 years ago.
Thank goodness for that. I thought I might have been entering the nightmare of US taxation!

I would suggest that you just apportion the US income and the tax paid (and hence the tax credit claimed under the double taxation treaties) into the appropriate UK tax years. Just keep a note of what you have done for your own records in the event of a subsequent enquiry by HMRC.

Customer: replied 3 years ago.

many thanks Keith.

Expert:  bigduckontax replied 3 years ago.
Pleased to be of assistance.
bigduckontax and 2 other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your support.