DaveF1006
Expert Alumni

Deductions & credits

Because your foreign taxes paid was based on a certain income level. if you report these deductions, that certain income level will drop and reduce your tax liability on that income. As a result, your foreign tax credit would be reduced thus increasing your federal tax due.

 

Those deductions would come in handy if this was foreign earned income because it would produce less taxable income but capital gains are considered passive income thus none of these expenses can be applied.

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