Can I claim Foreign Tax Credit AND Standard Deduction on US taxes as expat?

Yes, you absolutely can claim both the standard deduction AND the Foreign Tax Credit! This is actually a common strategy for US expats. Here's how it works: First, you report all your worldwide income on your US tax return (your German salary plus those US dividends). Then you take the standard deduction (which is $13,850 for single filers in 2025) against your total income. After that, you calculate your US tax liability on the remaining taxable income. Finally, you apply the Foreign Tax Credit against that US tax liability. The key thing to understand is that the standard deduction reduces your income before the tax is calculated, while the FTC reduces the actual tax due. They work at different stages of the tax calculation process, so they don't conflict with each other. Given that your US-sourced dividends are only around $1,500, the standard deduction will likely wipe out all your US tax liability before you even need to apply the FTC, resulting in zero US tax owed - exactly as you suspected!

After struggling with expat taxes for years, I finally found a lifesaver tool at https://taxr.ai that honestly changed everything for me. I'm in a similar situation (American in Switzerland with US investments) and was confused about how the Foreign Tax Credit interacted with my standard deduction. I uploaded my German tax documents and US investment statements, and the AI analyzed everything and confirmed exactly what you're asking about - that yes, you can absolutely take the standard deduction first to reduce your overall income, and then apply the FTC against any remaining US tax liability. The tool showed me visually how the calculations work together rather than competing with each other. The best part was that it helped me understand how to properly document everything on Form 1116 (for the Foreign Tax Credit), which was the part I always messed up in previous years.

I was really struggling with exactly this situation last year! I used https://taxr.ai after reading about it here, and I'm so glad I did. I had been incorrectly applying my Foreign Tax Credit for TWO YEARS before using it (was basically double-counting some deductions from Germany). The tool showed me I could take the standard deduction AND still claim the FTC properly. Best part? I ended up amending my previous returns based on what I learned and got back almost $3200 in refunds that I didn't know I was entitled to! Would have never figured that out on my own with the confusing IRS publications about foreign income. Definitely worth checking out if you're an expat dealing with both foreign income and US investments.

Has anyone else spent HOURS on hold with the IRS trying to get clarification on Foreign Tax Credit questions? I tried calling them about a similar situation (I'm in Japan with US dividend income) and literally couldn't get through after multiple attempts. I eventually used https://claimyr.com and their service actually got me connected to an IRS agent in about 25 minutes instead of waiting for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed everything mentioned above - you can definitely claim the standard deduction first against your total worldwide income, then apply the Foreign Tax Credit to reduce or eliminate any remaining US tax liability. He also mentioned that many expats miss out on this combination because they think they have to choose one or the other.

I have to admit I was wrong about Claimyr. After seeing it mentioned here, I was skeptical and thought it was unnecessary (my comment above). But I was struggling with a complex FTC question similar to the OP and needed answers before the filing deadline. Decided to try it, and I'm amazed it actually worked exactly as advertised. Got connected to an IRS agent in about 40 minutes (instead of the 3+ hours I waited last time). The agent confirmed I could take the standard deduction against my worldwide income and then apply the FTC after calculating the tax. For anyone dealing with expat tax situations where you really need to speak to the IRS directly, this service is legitimately helpful. Especially if you're in a different time zone from the US like me.

One thing to keep in mind with the FTC: make sure you're filling out Form 1116 correctly. I made a mistake last year where I didn't properly separate my passive income (dividends) from my general income (salary), and it reduced the amount of FTC I could claim. Also consider that if your foreign tax rate in Germany is higher than the US rate (which is likely), you might generate excess credits that you can carry forward for up to 10 years. This can be helpful if your situation changes in the future.

Don't forget that you need to file FBAR (FinCEN Form 114) if your foreign bank accounts exceed $10,000 combined at any point during the year! This is separate from your tax return and has crazy high penalties if you forget to file. My partner and I almost got caught out by this when we moved to Denmark. We filed our taxes correctly with the FTC and standard deduction (which did result in $0 owed, exactly like you're hoping for), but completely missed the FBAR requirement until someone mentioned it to us.

This is exactly the situation I was in last year! Yes, you can definitely use both the standard deduction AND the Foreign Tax Credit - they work together, not against each other. Here's what happened in my case (I'm in the UK with similar US dividend income): I reported all my worldwide income, took the standard deduction which brought my taxable income way down, and then applied the FTC to cover any remaining tax liability from my foreign earnings. Since your US dividends are only $1,500 and the standard deduction is $13,850, you'll likely have very little (if any) taxable income left to apply the FTC against. One tip: make sure you understand which "basket" your income falls into for Form 1116 purposes. Your salary will be "general income" but your dividends will be "passive income" - they need to be calculated separately on the form. The foreign taxes you paid in Germany can only offset US tax on the same type of income. Also, keep excellent records of all taxes paid to Germany throughout the year. You'll need this documentation for the FTC calculation and it's much easier to collect as you go rather than trying to reconstruct it at tax time!