I am in a situation where my spouse will paying foreign taxes. We will qualify for the foreign tax credit. My question is how the foreign tax credit will impact our taxes if we file jointly? Chances a

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to the extent foreign taxes are allowed, they will reduce your federal income tax liability dollar for dollar. It can not be used to offset self-employment and certain other taxes. if you file separately, the FTC will only be able to be used against her federal income tax liability. Married filing jointly usually results in a lower tax liability than married filing separately. Any unused FTC's may be carried back one year and carried forward for 10 years. After 10 years any unused credit is lost credit is lost The total credit allowed is limited to the amount of US income tax that would be imposed on the taxpayer's foreign source income.