Double Taxation Relief Calculator
US citizens and resident aliens are taxed on their worldwide income. To prevent double taxation on income also taxed by a foreign government, the IRS allows a Foreign Tax Credit (FTC) under IRC Section 901. The allowable FTC equals the lesser of (a) the foreign tax actually paid and (b) the US tax liability attributable to the same foreign income. This calculator estimates the allowable credit using those two figures. Enter the foreign income, the foreign tax paid on that income, the total worldwide income, and the total pre-credit US tax liability.
Foreign Tax Credit limitation formula (IRC Section 904)
FTC limitation = US tax x (foreign income / worldwide income)
Allowable FTC = min(foreign tax paid, FTC limitation)
Excess foreign tax = foreign tax paid - allowable FTC
Net US tax = US tax - allowable FTC
The FTC limitation ensures you cannot use credits on foreign income to offset US tax on domestic income. Excess credits may be carried back one year and forward ten years under IRC Section 904(c).
Key considerations
- The FTC is calculated separately for each income basket: passive, general, foreign branch, and certain other categories post-TCJA (2017).
- Only taxes that qualify as income taxes under IRC Section 901 are eligible. Withholding taxes on dividends and interest generally qualify.
- You cannot claim the FTC on income excluded under the FEIE. Choose the more beneficial option for your situation.
- Estimated calculations only. File Form 1116 with your Form 1040 to claim the credit.
Frequently asked questions
What is the Foreign Tax Credit?
The Foreign Tax Credit (FTC) allows US taxpayers to offset their US income tax liability by taxes paid or accrued to a foreign government on the same income. It is claimed on IRS Form 1116 and prevents the same income from being taxed twice.
How is the FTC limitation calculated?
The FTC is limited to the lesser of the foreign tax paid and the US tax attributable to the foreign income. The US tax on foreign income = total US tax x (foreign income / total worldwide income). You cannot claim more credit than your US tax liability on that income.
Can unused FTC be carried forward?
Yes. Under IRC Section 904(c), unused foreign tax credits may be carried back one year and carried forward ten years to offset US tax in other periods.
Can the FTC and the FEIE be claimed on the same income?
No. You cannot claim the Foreign Tax Credit on income that you have excluded under the Foreign Earned Income Exclusion (FEIE). You may claim the FTC on income beyond the FEIE limit or on passive income not covered by the exclusion.
What is the per-country limitation?
Under the per-country limitation, the FTC is calculated separately for each country. Under the basket system (post-TCJA), income is categorized into passive, general, foreign branch, and other baskets, each with its own limitation.
Official sources
- IRS Form 1116, Foreign Tax Credit: irs.gov/forms-pubs/about-form-1116.
- IRS Publication 514, Foreign Tax Credit for Individuals: irs.gov/publications/p514.
- IRC Section 901 (Cornell LII): law.cornell.edu/uscode/text/26/901.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.