I'm trying to make sure I understand the process when filing a return with foreign income. In 2023 I had a contract that was delivered in another country. The contact was for an after tax daily rate paid in Canadian dollars. As an example, for a after tax value of $10,000 and a 15% foreign income tax rate, the gross payment would be $11,765 with foreign tax of $1,765.
What I am seeing in TurboTax when I enter these values is the tax credit of $1,765, which is what I expected. I am also seeing more Canadian tax being deducted, which I did not expect. Is that because my Canadian tax rate is more than 15% and I am being taxed on the difference between what I paid in foreign tax and my Canadian rate? Or something else altogether? Thanks.
