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Deductions & credits
@rlp2451 I think if you analyze the situation a little, it may make more sense.
You can only take a foreign tax credit to the extent that you are paying US tax on foreign income. So, if only a small portion of your income is from foreign sources, only a small portion of your US tax is from foreign income, so only a small tax credit is allowed in the current year. If you don't have any foreign income in future years, there is no US tax on foreign income in those years, so there should be no foreign tax credit allowed.
For instance, say you have $50,000 of domestic income and $50,000 of foreign income, you can only deduct 50% of your foreign taxes paid, since only half of your US tax is from foreign income.
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March 16, 2021
2:16 PM