Foreign tax credit

A foreign tax credit is a tax credit given to an individual who paid income taxes to a foreign government. This credit is available to people who have either worked in a foreign country or who have earned income from a source located in another country. The credit can only be claimed on income that is also subject to taxation by the domestic government. The intent behind the credit is to avoid having a taxpayer pay tax twice on the same income. In the United States, the foreign tax credit is claimed on Form 1116.