Tax
Double Taxation
Also known as: Double Tax, Juridical Double Taxation
Quick answer
IRS — Foreign Tax Credit relief · checked 9 Nov 2026
For a US taxpayer, the foreign tax credit is a domestic relief mechanism for qualifying taxes, even where no income-tax treaty applies. Its scope and limitations differ from the foreign earned income exclusion. Taxes on income excluded under that exclusion cannot also be credited.
Timing, income classification and the two jurisdictions' rules can leave residual tax. Check the actual income and applicable relief rules rather than assuming that a treaty always removes the entire liability.
Sources
- IRS — Foreign Tax Credit relief · checked 9 Nov 2026
Related terms
Tax Treaty
A tax treaty is an agreement between jurisdictions that can allocate taxing rights, reduce specified taxes and provide relief from double taxation. Entitlement depends on the treaty's text, residence and other conditions. Treaties and protocols have their own effective dates; signing a treaty is not the same as bringing it into force.
Foreign Tax Credit (FTC)
The Foreign Tax Credit can reduce US income tax for qualifying foreign income taxes paid or accrued. It is subject to source, category and US-tax limitations; it is not a guaranteed refund of foreign tax. Form 1116 is generally used by individuals. Taxes attributable to income excluded under FEIE cannot also generate a credit.
FEIE (Foreign Earned Income Exclusion)
The Foreign Earned Income Exclusion allows eligible US taxpayers to exclude up to $132,900 of qualifying foreign earned income for tax year 2026. A foreign tax home and either the bona fide residence or physical presence test are required. The physical presence test requires 330 full days in foreign countries during a consecutive 12-month period. The exclusion does not reduce self-employment tax.
Tax Residency
Tax residency is a domestic-law status used to determine a person's tax obligations. It is distinct from citizenship and permission to live in a country. Presence, homes, work and other ties can matter. A person can meet more than one country's domestic rules; an applicable tax treaty may resolve residence for treaty purposes.
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