I have an overall question regarding the carryback/carry-forward foreign tax credit that results from living abroad in a country with higher taxes than the USA.
For example, suppose the amount of foreign tax you pay abroad is $5,000 more than US taxes every year you live abroad (assume I live in the same location abroad for 5 years). You file for the FTC, receive the credit and carry it forward each year. If you never live in the US or in a country with lower taxes than the US, is there any way to recover this additional tax ($25,000 over 5 years) that was paid abroad? Is there a way to request/receive a refund for any of this amount, or does it just disappear once the credits expire in 10 years?
I understand you can carry back the FTC credit to a previous year, but if you are always paying more taxes abroad, there will never be any foreign tax to offset in the previous year, correct?
