Foreign Tax Credit - is there a maximum income allowed?

[dkunkle 2]

My husband was just approved at his interview in Montreal recently - yay!

Up until now, we have each been filing Married Filing Separately since he did not have a SS # and has not earned any income in the U.S - on the advice of our CPA.

However, his current employer in Canada may make him an offer to work part-time (one month on/one month off) while we looks for a job in the U.S. This would allow him to still have an income and we'd get to see each other more often, and is also good because he works in the oil and gas industry, which is soft right now. We suspect it may be awhile before he can find a job in that field in the U.S. However, I want to research how this would affect our taxes for 2016 and beyond.

I looked into a foreign income exclusion and the maximum exclusion is $100,800 annually. If he earns more than that, it appears that a foreign tax credit would probably be better for us to use when we file our U.S. taxes next year. I can't find anywhere that tells us there is a maximum foreign income tax credit....only the exclusion is limited. Based on this, a foreign tax credit would seem to be a better option for us IF he does continue to work part-time in Canada until we find him work in the U.S.

Does anyone know differently about any maximums on the foreign income tax credit?

[MariaR323 199]

The amount of foreign tax credit you're allowed to claim is limited to the lesser of the amount of foreign tax paid or the U.S. tax liability on the same income.

Have a look at this webpage that has detailed info and some examples: http://thismatter.com/money/tax/tax-credits/foreign-tax-credit.htm