Deductions & credits

The FTC makes my head hurt. It is so complicated and not very intuitive.

One thing to understand is that your FTC is limited by the proportion of foreign income to worldwide income times US tax.

This effectively means that if you have modest foreign income compared to your total income, you can't claim all the credit.  As you say the carryforward is worthless if you won't have more foreign income and a higher proportion of foreign income to US income in the future before the credits expire.

(One alternative is to get an itemized deduction not credit for the whole amount. But you can't switch back and forth (I think) and with the large standard deduction it might not make any sense.)

So for example if you have $25k in foreign income and $75k in US income, with $10k if foreign tax and $20k in US tax, the FTC limitation looks like this:

15k us tax times (25 / 100k) = 20k x .25 = 5k max credit for the foreign tax of $10k.

Now that is only about the US FTC. Treaties can change which country gets to tax what. That is very complicated. You might look at the actual treaty. It is here:

https://www.irs.gov/businesses/international-businesses/canada-tax-treaty-documents

It could well override US tax law or Canadian tax law and only allow one country to tax it. If so there may be a special procedure to stop Canada from taxing the pension or claiming an additional US tax credit.

You also might find IRS Pub 514 helpful

https://www.irs.gov/forms-pubs/about-publication-514

You might want to hire a CPA, enrolled agent, or tax attorney who specializes in US/international personal taxation to review your situation. There are probably many who special in Canada/US tax issues. I suggest that you do not use a regular professional. Specialization here is very important. Someone who regularly works in this area will just know the answer and will be worth buying an hour of their time.