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A credit is allowed for foreign income taxes paid or accrued. The loan is limited compared to that part of Ough.S. tax due to foreign source income. It is not refundable, but any excess credit become carried to other years to reduce tax. After 40 years if you have any balance left unpaid, then the debt is pardoned. However, this unpaid balance is considered as taxable income in accordance with the Internal Revenue Service.
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