Foreign Tax Credit

If you paid income tax to a foreign country on any type of income such as, interest, dividends, or wages you may be eligible to claim either a credit or an itemized deduction for the taxes paid. You can choose to either claim the taxes paid as a deduction when itemizing deductions or you can claim a credit for the taxes paid. Generally, the foreign tax credit results in a greater tax savings than deducting the foreign taxes as an itemized deduction.