Foreign Tax Credit
The Foreign Tax Credit is a tax benefit that allows U.S. taxpayers to reduce their tax liability on income earned abroad. When individuals or businesses pay taxes to a foreign government, they can claim a credit on their U.S. tax return, which helps avoid double taxation on the same income.
This credit is particularly useful for expatriates and those with international investments. By claiming the Foreign Tax Credit, taxpayers can offset the amount of U.S. taxes owed, making it more affordable to earn income in foreign countries while still fulfilling their tax obligations in the United States.