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A credit is allowed for foreign income taxes paid or accrued. The financial lending is limited to that particular part of Ough.S. tax due to foreign source income. It is not refundable, but any excess credit can be carried to other years to reduce tax.

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Julie's total exclusion is $94,079. On her behalf American expat tax return she also gets to claim a personal exemption ($3,650) and standard deduction ($5,700). Thus, her taxable income is negative. She owes no U.S. duty.

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