Which of the following statements about the foreign tax credit is accurate?

The accurate statement about the foreign tax credit is that it can only be claimed if you don’t take the deduction. The foreign tax credit is designed to mitigate the issue of double taxation that arises when U.S. taxpayers earn income abroad while also being subject to foreign taxes.

When choosing between the foreign tax credit and the foreign tax deduction, taxpayers must select one method to benefit from. If a taxpayer opts for the foreign tax credit, they cannot claim the foreign taxes paid as a deduction from their taxable income. This means that taxpayers must carefully evaluate their situation to determine which option provides the greater tax benefit.

The other statements provide inaccurate information regarding how the foreign tax credit operates in relation to taxpayer benefits. It’s not true that the credit is always better than the deduction, as the best option depends on the individual taxpayer's circumstances. The credit does not increase adjusted gross income, rather it directly reduces the tax liability. Additionally, not all foreign income qualifies for credits; instead, the credit is limited to foreign taxes paid or accrued on eligible foreign income.