If you paid taxes in Germany you may take a credit in the U.S. or you may take a deduction on Schedule A. Generally a credit is more advantageous. You use Form 1116 which is one of the most complicated forms the IRS has, but fortunately TurboTax walks you through it. The general idea is to apply a pro-rated portion of your deductions to your foreign income and then to calculate what portion of your U.S. tax is due to your foreign income. The result is the maximum you can claim, (or the actual tax in U.S. dollars whichever is lower). Unused foreign taxes can be carried forward 10 years, and Turbo Tax will keep track if you use it every year (Form 1116 Wks is updated every year with the correct information). You will probably find U.S. taxes are lower than Germany and so you won't be able to use all the tax as a credit (U.S. personal taxes are among the lowest in the world). Form 1116 Instructions and Pub 514 offer some 'light' reading explaining the deduction. If you choose to read them, make sure your mind is clear, you have time, and there is a glass of wine nearby.
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