At the request of ACA, Roger B. Adams, EA, U.S. fiscal expert on taxation of Americans overseas, has written for ACA the article below, The Foreign Tax Credit Explained.
ACA is grateful to Mr. Adams for his excellent contribution. He clarifies and informs on the advantages of using Foreign Tax Credits (form 1116) rather than Form 2555 for Americans working and residing in countries which have tax rates equal to or greater than U.S. tax rates, particularly since the passage of the TIPRA legislation in 2006. In a friendly way, Mr. Adams also guides you through Form 1116 step by step to eliminate its mysteries. We highly recommend that Americans overseas read this article before tacking the U.S. tax filing for 2011. Click here for the complete article (revised April 2012).