How-To Guides19 min read
How to Fill Out Form 1116 (Foreign Tax Credit)
Start with mechanics, not convenience. **Form 1116 (FTC)** reduces U.S. tax liability on foreign-source income, while **Form 2555 (FEIE)** excludes qualifying foreign earned income from taxable income. A credit reduces tax dollar for dollar. An exclusion reduces the income being taxed. If the Form 1116 limitation applies, unused FTC can generally be carried back to the previous tax year or forward up to 10 tax years.
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