Early withdrawl of a pension fund from a foreign country

[ThomasM125]

The result may not be even. You will get credit for the foreign tax to the extent your US tax is the same on the foreign income. So, if the foreign tax on the foreign income was more than the US tax on it, you will have paid more tax to the foreign government than you get credit for on your US tax return. However, any unused foreign tax can be used in other years to offset US tax on foreign income in those years.

[Lembo]

thanks @ThomasM125 in this case it makes sense that I received a 17k credit on 28k paid but then.

but then the question is why it doesn't cover whatever this additional income increased in the taxes I owe?

could it be that the credit is calculated on the US to be paid on the amount with the amount by itself so for example 10k but when the amount is added the other taxable income then overall percentage is higher and therefore results in a 14k tax increase and not 10k?

[RobertB4444]

You've got it.  You're only allowed to take a credit for what the tax would be on the foreign income itself.  But adding the foreign income to your overall income has increased your overall tax rate.  So now your US income is taxed at a higher rate and the foreign taxes can't be used to offset that.

@Lembo