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Form 8854 - How to calculate Tax Liability from Tax Returns

1.6K views 3 replies 2 participants last post by  Justchecking  
#1 ·
IRS Instruction:
For each of the 5 tax years ending before the date of your expatriation, determine your total tax less any foreign tax credit. For 2021, use the amount shown on the 2021 Form 1040, line 24, less any amount reported on Schedule 3 (Form 1040), line 1.

Question:
The Line 24 (Total tax) on my tax return already accounted for/deducted my foreign tax credit on Line 20 & 21 referenced to Schedule 3. Can I simply use Line 24 as my tax liability amount? I am confused as to why IRS instructing to use line 24 then less any amount on Schedule 3. If so, the foreign tax credit would be deducted twice.
 
#3 ·
I believe the amount they want is line 24 - before any payments, withholdings or tax credits. But I'm not really familiar with Schedule 3 (form introduced after my US tax obligations ceased). What they want is your gross tax bill - without regard to "payments" made during the relevant year.
 
#4 ·
Yes, I agree and I probably will just use Line 24 as the instruction just don't make any sense. My Schedule 3 Line 1 shown the same figure as per Line 20 and Line 21 which is the foreign tax credit. It will make very minimal difference to the 5 Year average as it will be way below the exemption amount.