How to Claim Foreign Tax Credit with Form 1116

File Form 1116 to claim the foreign tax credit if you are an individual, estate, or trust, and you paid or accrued certain foreign taxes in a foreign country or a U.S. possession.

>> Download or print Form 1116

Foreign Taxes Eligible for a Credit

You may obtain a credit for excess income and profits taxes paid or accrued during your taxable year in any foreign country or U.S. possession, or any political subdivision (for example, city, state, or province) of the country or possession. This includes taxes paid or accrued in lieu of taxes on foreign or possession income, war profits, or excess profits that are otherwise generally imposed. For purposes of the credit, U.S. possessions include Puerto Rico, the United States Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa.

U.S. citizens living in certain treaty countries can get an additional foreign tax credit for foreign taxes imposed on certain U.S. income. If this applies to you, consult with your trusted accountant (CPA) to help you navigate the tax difficulties of your situation.

Who must file Form 1116?

• You paid income taxes to a foreign country or US possession on income you earned abroad.
• You are filing a US tax return (Form 1040, 1040-SR, etc.).
• The income taxes you paid abroad are greater than the amount you can claim as a deduction on your U.S. tax return.

• You were a resident of Puerto Rico during your entire tax year, or
• You pay or accrue taxes in a foreign country or U.S. possession on income from foreign sources that is effectively connected with a trade or business in the United States. But if you must pay taxes to a foreign country or U.S. possession on income from U.S. sources just because you are a citizen or resident of that country or U.S. possession, do not use that tax to calculate the amount of your credit.

How we can help you

At H&CO, our experienced team of tax professionals (CPAs) understand the complexities of income tax preparation and are dedicated to guiding you through the process. With a personalized approach, we help you navigate US and international income tax laws, staying up to date with the latest changes.

To learn more about our accounting firm's services, take a look at our Individual Tax Services, Business Tax Services, International Tax Services, Expat Tax Services, SAP Business One, Entity Management, Capital human resources, and audit and assurance services.

If you have any questions, do not hesitate to contact us and our team will contact you as soon as possible.