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Most foreign countries with an income tax will tax your dividends at the source - when the dividend is paid. They'll have it withheld from the dividend before it is paid to you. The actual amount of the tax will depend on their local tax laws and any treaty they may have with the U.S. However, 15% is a pretty common rate for dividends in tax treaties with the U.S.

You will also be taxed on the dividend as a U.S. citizen. Dividends from operations of a foreign corporation should qualify for the new, lower rate of 15% on your U.S. return. And you are correct if that sounds like a double tax, because it is.

The good news is that there is a credit available to you to offset most or all of that double taxation. If you pay foreign taxes on the same income you have to report on your U.S. return, you would qualify for the foreign income tax credit. You claim the credit on form 1116.

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