Tax
Foreign tax credit
A foreign tax credit reduces tax owed in one country by the amount of income tax already paid to another on the same income. It is a principal mechanism for relieving international double taxation, and is generally limited to the amount the crediting country would have charged.
In plain terms: Credit for tax you already paid elsewhere on the same income.
Why it matters
The reason a founder taxed in both the US and their home country is often not taxed twice in full. The limits matter: credits are usually capped and can be lost if the two countries characterise the income differently.
Read the full guideUS business taxes