What is the foreign tax credit?

Dollar-for-dollar credit against US tax for income taxes paid to foreign governments. Reduces double taxation for US taxpayers with foreign income. Claimed on Form 1116.

How is the FTC limitation calculated?

Limitation = US tax times (foreign income in basket divided by total income). You can credit foreign taxes up to this limitation. Excess credits carry back 1 year and forward 10 years.

Should I take the FTC or the FEIE?

Foreign Earned Income Exclusion excludes up to $126,500 (2024) of foreign earned income from US tax. FTC gives a dollar-for-dollar credit. High-tax countries favor FTC; low-tax countries may favor FEIE.

What are the FTC income baskets?

General basket (wages, business income), passive basket (dividends, interest, royalties), and several special baskets. Losses in one basket can reduce credits available in that basket.

Does the simplified election help for small amounts?

If total creditable foreign taxes are $300 or less (single) / $600 (MFJ), you can claim the credit directly on Schedule 3 without Form 1116, avoiding the limitation calculation.

US Foreign Tax Credit Calculator (Form 1116)

Calculate foreign tax credit for US taxpayers with foreign income. Credit limited to US tax times (foreign income divided by total income). Passive vs general basket. Excess credits carry back 1 year, forward 10.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate foreign tax credit for US taxpayers with foreign income. Credit limited to US tax times (foreign income divided by total income). Passive vs general basket. Excess credits carry back 1 year, forward 10. Use the foreign tax credit result to inform your calculation.

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Frequently Asked Questions

What is the foreign tax credit?

How is the FTC limitation calculated?

Should I take the FTC or the FEIE?

What are the FTC income baskets?

Does the simplified election help for small amounts?