Tony Pine earned foreign interest income of $7,000 in 2020.15% tax was withheld by the foreign country.Toni's total taxable income for the year was $80,000, and the tax payable was calculated at $10,500.How much is Toni's foreign tax credit? (Rounded)
A)$919
B)$1,007
C)$1,050
D)$1,575

Question

Quizplus · Accepted Answer

The foreign tax credit is calculated as the lesser of the foreign taxes paid or the amount of U.S. tax attributable to the foreign income. Toni paid 15% of $7,000, which is $1,050. The U.S. tax attributable to the foreign income is ($7,000/$80,000) * $10,500 = $919. Therefore, the foreign tax credit is $919.

Tony Pine Earned Foreign Interest Income of $7,000 in 2020