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Scenario $4$: International Tax $$ Foreign Tax Credit Deep Dive

Wages $($earned while living abroad$)$: $$125,000$

Qualifies for the Foreign Earned Income Exclusion

Foreign income taxes paid: $$8,000$

Interest and Dividend Income $($US$-$based$)$: $$3,000$

Itemized Deductions: $$15,000$

Allowable deduction for self$-$employment tax: None

Calculate:

AGI, Taxable Income

Foreign Tax Credit $($consider limitations based on type of foreign income$)$

Total tax liability, and analyze the effectiveness of the credit in eliminating double taxation.