How do I report foreign tax refund ? Received foreign tax refund from last two years which I claimed as tax credit during those years.

[DaveF1006]

To clarify, are you trying to exclude your foreign income an take the foreign income credit at the same time?  How much was your foreign income?

@Moi-Aussi

[kcmetzy]

@DaveF1006 @nikesyrena @DS30 
I, too, have a similar question. I have been reading and reading and it seems like some experts say to amend the return, while others say to report the foreign tax refund in the year you receive it. 

Example:

Paid $13,000 to Canada Revenue Agency in 2021. 

After filing Canadian taxes in February 2022, the actual tax liability is $3800, resulting in a refund of about $9,200. The refund has not been received yet as of 4/19/2022. 

When filing 2021 US taxes, can I take the foreign tax credit of $13,000? And then report the $9,200 as income when it’s time to file 2022 taxes (since that is the year the refund was actually received)?

I know it seems easier to anticipate the refund and only take the $3800 credit for 2021, but if it’s an option to include the refund in 2022 instead, it would save me a significant amount of money spreading it out over 2 years. 

[ishtari]

Super helpful, thanks.

[Dom19]

I was thinking about the question from Moi-Aussi as to how the the amount of the foreign tax refund reported as US income is offset against the carryover FTC amount.  Won’t it take care of itself?  If you are reporting the foreign tax refund as extra foreign income for the tax year you receive it, then the IRS will use that higher income amount to calculate your current U.S. tax burden.  The U.S. will thus tax the foreign tax refund as income which will increase the amount you owe the U.S. and consequently it will reduce your FTC for current year and thus also reduce your FTC amount that carries over to the following year.  Is my reasoning logical?