How does FTC-only compare with FEIE plus the remaining foreign tax credit?
Compare regular federal income tax with FTC only against FEIE plus the remaining credit for one employee's ordinary foreign wages. The supported full-year scenario allocates the basic standard deduction, limits the credit to the foreign share of U.S. tax, stacks nonexcluded income, and disallows foreign taxes on excluded wages. Unused taxes are not refunds.
foreign tax credit calculator
Quick answer
Compare regular federal income tax with FTC only against FEIE plus the remaining credit for one employee's ordinary foreign wages. The supported full-year scenario allocates the basic standard deduction, limits the credit to the foreign share of U.S. tax, stacks nonexcluded income, and disallows foreign taxes on excluded wages. Unused taxes are not refunds.
Also answers
- foreign tax credit vs foreign earned income exclusion
- FEIE stacking calculator
- Form 1116 credit limitation
- FTC carryforward comparison
Good fit when
- One general-category foreign wage basket
- Understanding FEIE and FTC coordination
- Reviewing credit limits without implying refunds
Have ready
- Tax year and filing status
- Ordinary foreign employee wages and U.S. income
- Creditable foreign taxes and verified carryforward
- Requested FEIE and independently confirmed supported eligibility
Result you get
FTC-only and FEIE/FTC federal tax, allocation, stacking, excluded taxes, credit limitation, credit used and unused taxes.
How this calculation works
- Use only one ordinary general-category wage basket and U.S. ordinary income; apply the basic selected-year standard deduction.
- Allocate that deduction to foreign wages using gross income, including excluded wages, consistent with Form 1116.
- Apply the selected exclusion with ordinary-rate stacking and remove the taxes attributable to excluded wages.
- Limit current-year credit before using verified same-basket unexpired carryforward capacity.
- Display unused current taxes separately from unused existing carryforwards; no refund or prior-year carryback is calculated.
Common mistakes and caveats
- 2027 indexed amounts are not yet published. Where needed, the calculator explicitly uses 2026 provisional baselines, not fabricated 2027 amounts.
- Only federal regular income tax is compared, using progressive-rate arithmetic instead of rounded IRS Tax Tables. State tax, FICA, self-employment tax, AMT and other credits are excluded.
- Only a basic standard deduction is supported. Additional age/blind/dependent deductions, Schedule 1-A and itemized expenses require separate allocation.
- All foreign wages must qualify as current-service-year foreign earned income. No U.S. government wages or prior/later service-year amounts. Exclusion is zero or the full smaller-of-wages/annual-limit amount.
- Foreign tax must legally qualify for the credit. Foreign payroll/social-insurance levies and foreign refundable taxes cannot be entered as creditable income tax without review.
- FEIE elections and revocations can affect later years. The tool does not establish tax-home/residency eligibility or restore expired carryforwards.
FAQ
How is the foreign tax credit limitation calculated?
Multiply the regular U.S. income tax before credit by the ratio of foreign taxable income in the general category to worldwide taxable income. The tool applies the basic standard deduction proportionally, caps the ratio at one, and does not let the credit exceed available qualifying foreign taxes.
Why does FEIE not simply restart my U.S. tax brackets at zero?
Nonexcluded income is taxed at the rates that would apply if the excluded income remained. The calculation taxes nonexcluded taxable income plus FEIE and subtracts the ordinary tax on FEIE. This stacking can make the remaining income's tax higher than a fresh low-bracket calculation.
Can I exclude wages and claim the foreign taxes on those wages?
Not on the same excluded wages. In the supported no-business-expense wage scenario, foreign tax attributable to excluded wages is removed in proportion to FEIE divided by total foreign wages. Only the remaining foreign tax enters the credit comparison.
Will unused foreign tax produce a cash refund?
Not by itself. Excess general-category taxes ordinarily have a one-year carryback and then up to ten years forward, subject to credit limits and expiry. The calculator displays unused taxes for review and uses only entered verified unexpired carryforwards; it does not manufacture a refund or schedule carrybacks.
Are 2025, 2026 and 2027 FEIE limits all official?
The verified limits are $130,000 for 2025 and $132,900 for 2026. The unpublished 2027 indexed amount is represented only by an explicitly labeled $132,900 2026 provisional baseline. Federal brackets and deductions also retain year-specific historical data.
Which foreign income situations are blocked?
Capital gains, passive/branch baskets, loss accounts, other credits, AMT, treaty sourcing, special deductions, housing, partial-year FEIE, spouse exclusions and self-employment are outside scope. All entered wages must be current-service-year FEIE-eligible wages; U.S. government wages and arbitrary partial exclusions are unsupported.
Last updated & sources
Last updated October 13, 2026.
- IRS Publication 514: foreign tax credit and exclusions
- IRS Form 1116 instructions: allocations and limitation
- IRS Form 2555 instructions: eligibility and stacking
- IRS Form 2555: full-year smaller-of-income/limit exclusion
- IRS Revenue Procedure 2025-32: 2026 federal indexed amounts
- IRS figuring the FEIE: historical annual limits
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