The foreign tax credit cannot be more than the foreign tax credit limit. The limit is calculated by multiplying your U.S. tax by a fraction. To calculate the fraction, divide your foreign income by your total taxable income (U.S. and foreign). When the fraction is multiplied by your U.S. tax, the result represents the amount of U.S. tax due on your foreign income.
If your credit is limited, you may carry over the remaining foreign taxes to use in subsequent years where you have foreign income. The taxes may also be carried back to the previous tax year. TaxAct® will print a carryover worksheet that you should keep with your tax records.