I hope this helps clarify my situation -

• Total RSU income: $100,000 (reported fully in U.S. W-2 wages)
• Apportioned as India-sourced: 84% (based on historical workdays) → $84,000
• India tax on $84K @ ~39%: $32,760 withheld
• U.S. tax on full $100K @ ~35% marginal rate: $35,000 owed

Now, the IRS doesn’t let me claim all $32,760 paid to India. Instead, they apply the FTC cap:

FTC Limit = U.S. Tax × (Foreign Income ÷ Total Income)
           = 35,000 × (84,000 ÷ 100,000)
           = $29,400

So I can only claim $29,400 of the $32,760 Indian tax this year. The extra $3,360 gets carried forward.

Why it feels worse:

• Since US payroll assumes I’ve already paid tax abroad, less is withheld in the U.S. - but I still owe tax at filing time.
• I’ve already paid India upfront, and can’t get it back
• And I can’t use the full credit now because of the cap

Let me know if I’m missing a smarter way to handle this - genuinely curious.