Final answer:
The Foreign Tax Credit is claimed for income taxes paid to other countries, and it's limited when the foreign effective tax rate is lower than the U.S. rate to prevent double taxation benefits.
Step-by-step explanation:
The Foreign Tax Credit is claimed by taxpayers for the income taxes they pay in other countries. This credit may be restricted if the effective tax rate on the international earnings is lower than the effective U.S. tax rate on the international earnings. The purpose of the Foreign Tax Credit is to mitigate the double taxation that can occur when the same income is taxed by both the United States and a foreign country. Taxpayers can claim a credit for the foreign taxes paid, but this is limited to ensure no one receives a greater benefit than the amount of U.S. tax due on the same income.