Скачать или смотреть What Happens if You Claim the Foreign Tax Credit but Pay Less Tax Abroad?

Many US expats use the Foreign Tax Credit to offset US tax liability with taxes paid abroad. But what happens if your foreign taxes are lower than what you owe the IRS?

The FTC can only reduce your US tax liability dollar-for-dollar up to the amount of foreign tax paid. If your US tax exceeds your foreign taxes, you’ll still owe the difference to the IRS.

It’s also important to note that unused foreign tax credits may sometimes be carried back or forward, but they cannot exceed the US tax liability for the relevant year. 

Understanding the rules helps you strategize your global tax obligations and make the most of the tax benefits available to Americans living abroad.

If you want to learn more about tax benefits for expats, get in touch.

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