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You can claim a credit only for foreign taxes that are imposed on you by a foreign country or U.S. possession. Generally, only income, war profits and excess profits taxes qualify for the credit.
Your qualified foreign taxes for the tax year are not more than $300 ($600 if filing a joint return). All of your gross foreign income and the foreign taxes are reported to you on a payee statement (such as a Form 1099-DIV or 1099-INT).
The IRS limits the foreign tax credit you can claim to the lesser of the amount of foreign taxes paid or the U.S. tax liability on the foreign income. For example, if you paid $350 of foreign taxes, and on that same income you would have owed $250 of U.S. taxes, your tax credit will be limited to $250.
If the foreign tax paid is more than $300 ($600 for Married Filing Jointly) or they do not meet the other conditions to make the election to claim the foreign tax credit without filing Form 1116, taxpayers must file Form 1116 to claim the foreign tax credit.
There are three types of tax credits: Refundable. Nonrefundable. Partially refundable.
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The standard tax breaks in France take the form of either tax relief (réduction d'impôt), or a tax credit (crédit d'impôt). A réduction d'impôt is an allowance against the amount of income tax payable, whilst a crédit d'impôt is a payment to you by the tax authority.
Foreign Tax Credit Limit Your foreign tax credit cannot be more than your total U.S. tax liability multiplied by a fraction. The numerator of the fraction is your taxable income from sources outside the United States. The denominator is your total taxable income from U.S. and foreign sources.
Unless specifically excluded by a treaty, foreign-source income is taxable in France. Residents are entitled to tax credits for WHT paid on certain types of income from other tax treaty countries.
How do I know if I paid foreign taxes? The simplest way to see if you paid foreign taxes is to look at the Forms 1099 or Schedules K-1 you received. For example, the 2020 and 2021 Form 1099-DIV lists the foreign taxes paid in box 7.
A tax credit is a dollar-for-dollar reduction of the income tax you owe. For example, if you owe $1,000 in federal taxes but are eligible for a $1,000 tax credit, your net liability drops to zero.

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