Foreign Tax Credit

If you work for a business in a foreign country...or have investment income from foreign assets...you might be eligible for a foreign tax credit.

A foreign tax credit is a tax credit you can get since you already paid income taxes to another (foreign) government. While the U.S. requires everyone to report all of their income (foreign or not), they offer a foreign tax credit to give you a tax break, so that you aren’t being taxed twice on your entire income by two different governments.

Unlike some other tax credits, the foreign tax credit is nonrefundable. That means it doesn’t translate into a refund check. It’s just used to ease the burden, if any, of paying taxes to two governments.