Kenneth:

My wife and I worked in Paris last year. I've been reading up on Form 1116 to see if we qualify for the foreign tax credit. I'm still not clear whether we do or not.

You:

No problem, I can help you with that today. I just have to ask both of you a few questions.

Kenneth:

Okay, good.

Vivian:

Great!

You:

First of all, what kind of income did you earn in Paris last year?

Kenneth:

Well, I taught English as a second language at a high school.

Vivian:

And I worked as a paid apprentice in the fashion industry.

You:

So you both earned income in Paris. Did you pay the French government a tax on those wages?

Vivian:

Yes, a really large tax. Do we have to pay taxes to the United States as well?

You:

Well, if you can claim the foreign tax credit it will offset that tax you paid. Did you have any other sources of income last year?

Kenneth:

We did have a savings account in a French bank and it earned interest.

You:

Did you pay any income tax on that account?

Vivian:

Yes we paid a 30% income tax!

You:

Just one more question for you two. Were you planning on claiming the foreign earned income exclusion on your tax return?

Kenneth:

No, we already looked into that and determined we don't qualify.