Estimate the U.S. foreign tax credit (FTC) to mitigate double taxation on foreign‑source income. Input foreign taxes paid, income categories, and U.S. tax to compute the FTC limitation and carryback/carryforward amounts. Helpful for investors and expats evaluating the benefit versus the foreign earned income exclusion (FEIE).
Frequently Asked Questions
FTC vs FEIE—how to choose?
FEIE excludes earned income; FTC offsets tax on foreign‑source income.
Model both—FTC can be better when income exceeds FEIE limits or includes passive categories.
What is the FTC limitation?
It caps the credit to the portion of U.S. tax attributable to foreign‑source income.
Excess credit can carry back 1 year or forward 10 years.
Which taxes qualify?
Generally, income taxes or taxes in lieu of income tax.
VAT and sales taxes typically do not qualify.
Category baskets?
Income is grouped (general, passive, etc.).
You compute limitation by basket; credits usually cannot cross baskets.
State income tax?
FTC is a federal provision.
Some states offer separate credits; check state rules.
Documentation needed?
Maintain foreign tax statements and translations.
You’ll file Form 1116 with detail by country and basket.
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- Author: SuperCalc Editorial Team
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- Last updated: 2026-01-13
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Financial/Tax Disclaimer
This tool does not provide financial, investment, or tax advice. Calculations are estimates and may not reflect your specific situation. Consider consulting a licensed professional before making decisions.