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Question
Can I claim any foreign tax credits by being an American citizen working in a foreign country, even if my paychecks get deposited into my US bank accounts?
AI accountant’s answer:

Absolutely! As a U.S. citizen working in a foreign country, you may be eligible to claim a Foreign Tax Credit. This credit is for taxes you paid to a foreign country on income you earned there. It doesn't matter where your paychecks are deposited. The key is that you paid foreign taxes on that income.

Remember, the credit is usually a dollar-for-dollar reduction of your U.S. tax liability. But it's important to note that you can't claim a credit for taxes paid on income that's excluded from U.S. tax under the Foreign Earned Income Exclusion.

Also, the credit can't be more than the U.S. tax liability on the foreign income. So, if the foreign tax rate is higher than the U.S. rate, you may not be able to claim a credit for the full amount of foreign taxes paid.

To claim the Foreign Tax Credit, you'll need to file Form 1116 with your tax return. It's a bit complex, so you might want to use tax software or get help from a tax pro.

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