How does the Foreign Tax Credit help me avoid being taxed twice on the same income?

The Foreign Tax Credit (FTC) lets you offset your U.S. tax bill, dollar for dollar, with income taxes you've already paid to another country on the same income. As a resident alien taxed on worldwide income, you might owe both India (or another country) and the U.S. on foreign salary, interest, or capital gains; the FTC prevents that double hit. You claim it on Form 1116 (a simplified path exists for small amounts of passive income). The credit is generally limited to the U.S. tax that would apply to that foreign income, and unused amounts can carry back one year or forward ten. Keep proof of foreign taxes paid—assessments, withholding statements, and conversion to U.S. dollars. For many NRIs and new immigrants the FTC is the main tool that keeps cross-border income from being taxed twice.