The foreign tax credit is one of the tax breaks a US expat can claim. A foreign tax credit allows you, a taxpayer, to offset your US federal tax liability dollar for dollar! For example, if you would owe $20,000 in US federal taxes, but you also paid $20,000 (or more) in foreign income taxes, then you would be able to claim a foreign tax credit of $20,000 reducing your US federal tax liability to $0!
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|US tax liability (over $70,000)||$20,000|
|Less: Foreign tax Credit||$20,000|
|US tax liability||$0|