pk
Level 15
Level 15

Deductions & credits

@tuxedorose 

Response to Q-1 --- in order to be able to use the safe harbor ( and keep 1116 out )  you would have to claim/ recognize ONLY the safe harbor amount.   While  you must recognize any and all foreign income, there is no such requirement for the foreign taxes paid.    The form 1116 is not only complicated  but  its limitations  often will result in less FTC for the year.   My personal view is that  because this area of statute is driven by treaty requirement of "ameliorating" the effects of double taxation it advertises " we recognize dollar for dollar " foreign taxes paid, the actual effect on the taxpayer is far less. So I always suggest ( especially  when FT is  not too far above the  safe harbor ), try it both ways and see which is more beneficial to you.

 

Response to Q-2 ---- You are correct in your understanding.

 

Is there more I can do for you ?

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