Considerations for US taxpayers
While the IRS have released a number of reliefs relating to COVID-19, US citizens need to be aware that there are no reliefs relating to the Foreign Tax Credit (FTC) provisions.
US taxpayers who are on the ‘paid’ basis for FTC purposes should speak to their client service team about the timing of their 31 July payment on account. In most cases, it will make sense to make this payment, and possibly the remainder of your 31 January 2021 payment, on or before 31 December 2020. This is to ensure you have sufficient FTCs in place to utilise on your 2020 US Federal income tax return.
Subject to an individual’s income level in the next US (2020) and UK (2020/21) tax years and the knock-on effects of COVID-19, individuals may also wish to review their payments on account for the tax year to determine whether there is scope for a reduction and include a claim in their 2019/20 UK tax return.
This article was last updated on 3 April 2020.