Foreign tax credit expenses definitely related to income

[jrlink]

Hello,

I was on a consulting contract in a foreign country where income tax was withheld. Would like to claim is as credit. Do I enter on line line 2 of form 1116 the expenses that I am deducting on Schedule C that are related to that income? Thank you.

[SusanY1 · Accepted solution]

If you are reporting the full amount of the income (rather than the net profit) as the foreign income then, yes, you will enter the expenses as deductions "definitely related".  

However, if you enter the net profit as the foreign income you would not need to adjust this number. 

 

[jrlink]

Thank you very much. It's logical and rational.

[June YW]

For the expenses definitely related to foreign income, does the expense include home office, self-employment taxes, etc? 

[PatriciaV]

Yes. Deductions to foreign earned income can include moving expenses, other business expenses, or the employer-equivalent portion of self-employment tax paid on self-employed earnings in a foreign country.

@June YW