Like I said - taxes and accounting sometimes are confusing to me ...
So to clarify with a very simple hypothetical situation. Say I earn 6k/month, and my company paid 5k in taxes to a foreign country. My filing would be:
1040 line 7 = 72,000
1040 lines 8-21 = 0 (no other income to make situation simple)
1040 line 22 = 72,000
1040 lines 23-36 = 0
1040 line 37 = 72,000 AGI
Standard deduction -5,800
taxable income 66,200
Taxes from table 12,600
Foreign Tax Credit 4,000 <- I can take credit for foreign taxes even
though I did not logically or physically pay
them .. +1,000 carry to over to the next year
Taxes due 8,600
Taxes withheld 13,600
Refund 5,000 <- My company paid my foreign taxes, and the
IRS gives this to me - what a deal!
So, as a hypothetical situation, I make out well ?!?