IRA to ROTH IRA Conversion - use of Foreign Tax Credit?

Hello,

I'm a US citizen married to a UK citizen and we both reside and work in the UK. I'm in my 30s, retirement is decades away from now, and who knows what the tax rates and future holds that far ahead. We enjoy life here and I can't see us settling in the US in future, but never say never.

I'm a basic rate UK taxpayer working as an NHS nurse. I've have been accruing Foreign Tax Credits (FTCs) in the 4 years I've lived here. I have 401k pensions from previous jobs in the US and in 2022 I combined these into an IRA and ROTH IRA with Fidelity for ease of managing.

I'm considering a conversion of the IRA (~$20k) into the ROTH IRA. Are FTCs, earned through the general income category (wages), eligible for use to offset the taxable income from a conversion?

Even if the above answer is no, I am still considering proceeding with the conversion little by little each year, for two reasons:
1. I'm currently within the 12% US tax band now and will likely move into the 22% tax band in the near future.
2. The converted ~$20k will grow tax free over the next 20-30 years in the ROTH IRA instead of growing as a taxable sum in the Traditional IRA.

Thoughts and opinions welcome

Best wishes,
Phoebe

I think it depends on individual circumstances but is probably a good idea. My wife, son and I have all converted our 401ks to IRAs then converted them over the years to Roth IRAs. What’s not to like about tax free money when you eventually need it. My wife and I converted our IRAs to Roths over a 10 year period starting the year we retired (at 55). It meant that once we started drawing OAP and SS the move to a higher tax bracket was not a problem, plus we are now at an age where the withdrawals are tax free and have paid for a new roof and a new kitchen this last couple of years.

We did not pay HMRC taxes on the conversions as they were done as lump sums on alternate years (to avoid them being “periodic”). The wording the tax account used on the Self Assessment tax form was along the lines of “This year I did a lump sum withdrawal of $xx from my Vanguard pension plan and as a lump sum from a US pension plan it is subject to US taxes only so has not been included in the return”