Thank you @Mike9241 and @pk for your replies. Yes, @pk this is the same issue as last year, but I ended up not owing any foreign tax, hence did not file 1116.
So in your opinion, (with my example above), for 2023 (i.e taxes on wages withheld in 2023 whereas taxes on investment paid to Germany in 2024), I should use "Paid" and only include paid portion (on wages) in the 2023 tax filing, AND claim FTC for taxes paid in 2024 (for investment gain in 2023 calendar year) in my 2024 IRS tax return which I would file in 2025. Is this how it works when someone selects "PAID" method of accounting. This would also mean that I am paying both Germany and US the taxes on investments in 2024 (only to seek refund back from USA in 2025...very cumbersome approach)
Of course I understand that I can choose "accrued" and this way I can claim both paid and accrued amounts at the same filing, BUT It is an Irrevocable choice and I would be stuck with the choice. That would also mean that if I don't know the exact amount of foreign taxes, I would have to estimate and the Amend the return when the amount doesn't match.
What do experts like you suggest to the clients, like if you were my CPA and doing taxes for me 🙂
Thanks once again.
