Foreign Tax Credit Calculator 2026 โ Form 1116 Estimator
Calculate your allowable Foreign Tax Credit (FTC), FTC limitation, excess carryover, and compare FTC vs FEIE for Americans living and working abroad.
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All income from US and foreign sources combined $
Income earned or sourced from foreign countries $
Income taxes paid to foreign government(s) FTC is calculated separately per category
$0
Allowable FTC Credit
$0
FTC Limitation
$0
Excess Credit (Carryover)
$0
US Tax After FTC
FTC Limitation Calculation (Step-by-Step)
Carryover Summary
How to Use This Foreign Tax Credit Calculator
Enter your total worldwide income (all income including US and foreign), your foreign-source income (only the portion from foreign countries), and the foreign taxes actually paid to foreign governments. The calculator determines your FTC limitation and how much credit you can actually claim this year.
The calculator uses 2026 US federal tax brackets with the standard deduction. Actual Form 1116 calculations may differ based on your specific deductions and AMT situation.
The FTC Limitation Formula
US Tax Before Credits = f(Worldwide Taxable Income, Filing Status)
FTC Limitation = US Tax Before Credits ร (Foreign Income รท Worldwide Income)
Allowable Credit = min(Foreign Taxes Paid, FTC Limitation)
Excess Credit = max(0, Foreign Taxes Paid โ FTC Limitation)
US Tax After FTC = US Tax Before Credits โ Allowable Credit
FTC Limitation = US Tax Before Credits ร (Foreign Income รท Worldwide Income)
Allowable Credit = min(Foreign Taxes Paid, FTC Limitation)
Excess Credit = max(0, Foreign Taxes Paid โ FTC Limitation)
US Tax After FTC = US Tax Before Credits โ Allowable Credit
Example
Single filer, $150K worldwide income, $80K foreign income, $22K foreign taxes paid:
US Tax (pre-credit): $150K โ $15K standard deduction = $135K taxable โ ~$25,716
FTC Limitation: $25,716 ร ($80K รท $150K) = $13,715
Allowable Credit: min($22,000, $13,715) = $13,715
Excess (carryover): $22,000 โ $13,715 = $8,285 (carry forward up to 10 years)
US Tax After FTC: $25,716 โ $13,715 = $12,001
US Tax (pre-credit): $150K โ $15K standard deduction = $135K taxable โ ~$25,716
FTC Limitation: $25,716 ร ($80K รท $150K) = $13,715
Allowable Credit: min($22,000, $13,715) = $13,715
Excess (carryover): $22,000 โ $13,715 = $8,285 (carry forward up to 10 years)
US Tax After FTC: $25,716 โ $13,715 = $12,001
Extended
FTC vs FEIE Comparison Tool
Identify which method saves more tax for your foreign earned income situation and find the breakeven foreign tax rate
Compare the Foreign Tax Credit against the Foreign Earned Income Exclusion (FEIE) for your situation. Identify the breakeven foreign tax rate where FTC becomes more beneficial.
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Wages/self-employment from working abroad $
US wages, dividends, interest, etc. Effective rate paid to foreign government
2024: $126,500 | 2026: ~$130,000
| Method | Foreign Tax | US Tax Owed | Total Tax Burden | Take-Home |
|---|
Breakeven Analysis: Foreign Tax Rate Where FTC Equals FEIE
| Foreign Tax Rate | FTC Method Total Tax | FEIE Method Total Tax | Better Method |
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Frequently Asked Questions
What is the Foreign Tax Credit (FTC) and who can claim it?
The Foreign Tax Credit (Form 1116) allows US citizens and resident aliens to reduce their US tax bill by the amount of income tax paid to foreign governments. You can claim it on income taxes (not VAT, sales taxes, or property taxes) paid or accrued to a foreign country or US possession. You can either claim the credit (Form 1116) or take a deduction (Schedule A), but the credit is almost always more valuable.
What is the FTC limitation and why might I not get the full credit?
The FTC limitation prevents using foreign tax credits to offset US tax on US-source income. The formula is: FTC Limit = US Tax ร (Foreign Income / Worldwide Income). If your foreign tax rate is lower than your US rate, you get the full credit. If your foreign tax rate is higher (e.g., you pay 40% abroad but owe 24% in the US), you can only use the credit up to the limitation โ the excess becomes a carryover.
What happens to excess foreign tax credits I cannot use?
Excess FTC (foreign taxes paid above the FTC limitation) can be carried back 1 year or carried forward 10 years. This means if you had excess FTC last year, you may amend last year's return to claim it. Or you can apply it to future years when your US tax on foreign income may be higher. Track excess credits carefully โ unused carryovers expire after 10 years.
What is the difference between FTC and the Foreign Earned Income Exclusion (FEIE)?
The FEIE (Form 2555) lets you exclude up to $126,500 (2024) of foreign earned income from US taxable income entirely. The FTC gives you a dollar-for-dollar credit for foreign taxes paid. FEIE is generally better when your foreign tax rate is lower than the US rate. FTC is generally better when your foreign tax rate is higher than the US rate, or for passive income. You cannot apply both to the same income, but you can use FEIE for earned income and FTC for passive income.
Do I need to file Form 1116 to claim the Foreign Tax Credit?
Usually yes, but there is a simplified method: if your foreign taxes are $300 or less ($600 married filing jointly), all from passive income reported on 1099-DIV or 1099-INT, you can claim the credit directly on Schedule 3 without filing Form 1116. For higher amounts or earned income, Form 1116 is required. Note that Form 1116 must be filed per "basket" โ separate categories include passive income, general income, and foreign branch income.