A U.S. taxpayer can make an annual election to take a credit or a deduction for foreign income taxes paid.

Question

Quizplus · Accepted Answer

This is true. Under the U.S. tax code, a taxpayer may choose to take a credit for foreign income taxes paid or to deduct them from their gross income. The credit is generally more advantageous, as it directly reduces the amount of U.S. taxes owed, whereas the deduction only reduces taxable income. The taxpayer must make this election on their tax return each year.

A US Taxpayer Can Make an Annual Election to Take a a Credit