Question
My gestor told me today to file our American taxes first and use whatever is paid there as a credit towards our Spanish taxes. This seems backwards to me since Spain is our primary tax residence. However, I’m no expert on the subject, so this could be fine.
Does anyone have experience on the order things should be filed? Any official websites stating on the order it should be handled would be great if you know of any as well.
Answers
These are the answers of Spainguru’s Facebook group members:
“The tax treaty between the U.S. and Spain to prevent double taxation governs and specifies that you file first in the country where you are tax resident and take credit for those taxes in the other country. This almost always results in filing an extension in the U.S., filing in Spain, then filing in the U.S.”
“Yes, this is how it’s done. It does seem backwards that your gestor is advising you otherwise. You might want to get clarification from them!”
“It’s common sense—you cannot claim a tax credit in the U.S. for something you haven’t paid yet. You must pay your Spanish taxes first, then claim that as a foreign tax credit on your U.S. return.”
“Here is an article explaining it: USTaxHelp – Filing US Taxes from Spain It specifically states: ‘If you plan to use the foreign tax credit, you should pay your Spanish taxes before filing your U.S. taxes.’”
“The IRS website also has official Spain tax treaty documents: Spain – Tax Treaty Documents (IRS.gov)“
“You can technically file in either order, but if you pay in the U.S. first, you’ll likely need to file in Spain later and then amend your U.S. taxes or wait for a refund. It’s not efficient, but it’s possible.”
Conclusion
According to the U.S.-Spain tax treaty, individuals who are tax residents in Spain should file and pay Spanish taxes first, then claim a foreign tax credit when filing their U.S. taxes. This ensures compliance with both tax systems and prevents overpayment.
While it is technically possible to file U.S. taxes first and later use that as a credit towards Spanish taxes, it is not the most efficient approach. The common practice is:
- File in Spain first (as the country of tax residence).
- File in the U.S. later using the foreign tax credit to offset double taxation.
- Use official tax resources (like the IRS and tax professionals specializing in expat taxation) to ensure compliance.
For expats in Spain, consulting a tax professional familiar with both U.S. and Spanish tax systems is highly recommended to avoid costly mistakes.
