How do I claim the foreign tax credit on Form 1116 to avoid double taxation?
I'm a U.S. citizen living in the Netherlands and I pay Dutch income tax on my worldwide income. I also have to report the same income on my U.S. return. I know I can claim a foreign tax credit to avoid being taxed twice, but the Form 1116 is incredibly complex with all these separate categories and baskets. Can someone explain the basics of how this credit works and whether I should use the credit or the deduction?
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