A credit is allowed for foreign income taxes paid or accrued. The financial lending is limited to that particular part of U.S. tax due to foreign source income. It isn't refundable, but any excess credit end up being the carried to other years to reduce tax. Three Year Rule - The taxes owed in question has to be for money that was due at minimum three years in fat loss products .. You cannot file bankruptcy in 2007 and also discharge a 2006 tax owed. ...