How do you know if you should take the foreign tax credit or use the deduction

[AnthonyC · Accepted solution]

While each tax return is different, the vast majority of taxpayers are better off taking the foreign tax credit as the tax credit directly reduces tax liability.  The only way to know for a particular return is to try it both ways, but the tax credit is almost always the preferred route tax-wise (though taking the deduction is simpler and requires fewer entries).

See this article from the IRS - Foreign Tax Credit - Choosing to Take Credit or Deduction