Introduction If you paid or accrued foreign taxes to a foreign country onforeign source income and are subject to U.S. tax on the same income,you may be able to take either a credit or an itemized deduction forthose taxes. Taken as a deduction, foreign income taxes reduce yourU.S. taxable income. Taken as a credit, foreign income taxes reduceyour U.S. tax liability. In most cases, it is to your advantage to take foreign income taxesas a tax credit. The major scope of this publication is the foreigntax credit. The publication discusses: hotel rooms StavangerWho can take the credit, What foreign taxes qualify for the credit, and bed and breakfast ZandvoortHow to figure the credit. The amount of foreign tax credit you can take in a tax year isgenerally limited. This publication tells you how to carry back orcarry over the unused foreign taxes to other tax years. Unless you choose not to be subject to the foreign tax creditlimit, you claim the credit by filing Form 1116 with your U.S. incometax return. Two examples with filled-in Forms 1116 are provided at theend of this publication.