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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Example 
Foreign Wages$70,000
US tax liability (over $70,000)$20,000
Less: Foreign tax Credit$20,000
US tax liability$0

 

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