What does or doesn't qualify for the Foreign Tax Credit?
To be eligible for the Foreign Tax Credit, you must be a US citizen, resident alien, or a US nonresident alien who's a full-year resident of Puerto Rico.
You must have paid, accrued, or owe taxes on foreign income that is also subject to US income tax. This foreign tax must be an income tax or a tax in lieu of an income tax that is imposed on you and is a legal and actual foreign tax liability.
Foreign taxes that don't qualify:
Taxes that are refundable to you
Taxes used to provide a subsidy to you or a relative
Non-mandatory taxes that could have been avoided
Taxes paid or accrued on income earned in countries designated as a State Sponsor of Terrorism or that the US has severed ties or diplomatic relations
Social Security or Social Security taxes paid to countries with which the US has an International Social Security (Totalization) agreement
Taxes on foreign mineral income
Taxes from international boycott operations
A portion of taxes on combined foreign oil and gas income
Taxes paid by US persons controlling foreign corporations and partnerships who fail to file required information returns
