The tax code is a very confusing process but I will explain it the best I can. According to the IRS, your foreign tax credit cannot be more than your total U.S. tax liability multiplied by a fraction. The numerator of the fraction is your taxable income from sources outside the United States. The denominator is your total taxable income from U.S. and foreign sources. That same fraction is used in determining your foreign tax credit, which may greatly reduce your foreign tax credit.
Whatever is not claimed this year, you may have a foreign tax carryover, which means You can carry back for one year and then carry forward for 10 years the unused foreign tax.
Please read this IRS source document on how to figure the foreign tax credit.
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