A Deep Dive into the Foreign Tax Credit (Form 1116)
If you paid qualifying foreign income taxes and still owe U.S. tax, start with the Foreign Tax Credit and Form 1116. A credit usually beats a deduction because it offsets tax dollar for dollar. Do not start entering numbers until you decide whether you are taking a credit, an itemized deduction, or an exclusion. If you use the [Foreign Earned Income Exclusion](https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion) or the foreign housing exclusion, remove the excluded income and related foreign taxes from the credit path first.
