2015
Instructions for Form 1116
Department of the Treasury
Internal Revenue Service
Foreign Tax Credit
(Individual, Estate, or Trust)
Section references are to the Internal Revenue
Code unless otherwise noted.
Future Developments
For the latest information about
developments related to Form 1116 and
its instructions, such as legislation
enacted after they were published, go to
www.irs.gov/form1116.
General Instructions
Election To Claim the
Foreign Tax Credit Without
Filing Form 1116
You may be able to claim the foreign tax
credit without filing Form 1116. By
making this election, the foreign tax
credit limitation (lines 15 through 21 of
the form) will not apply to you. This
election is available only if you meet all
of the following conditions.
All of your foreign source gross
income was “passive category income”
(which includes most interest and
dividends). See Passive Category
Income, later. However, for this
purpose, passive income also includes
(a) income subject to the special rule for
high-taxed income described later, and
(b) certain export financing interest.
All the income and any foreign taxes
paid on it were reported to you on a
qualified payee statement. Qualified
payee statements include Form
1099-DIV, Form 1099-INT,
Schedule K-1 (Form 1041),
Schedule K-1 (Form 1065),
Schedule K-1 (Form 1065-B),
Schedule K-1 (Form 1120S), or similar
substitute statements.
Your total creditable foreign taxes are
not more than $300 ($600 if married
filing a joint return).
This election is not available to
estates or trusts.
You paid or accrued certain foreign
taxes to a foreign country or U.S.
possession.
See Foreign Taxes Eligible for a
Credit, later, to determine if the taxes
you paid or accrued qualify for the
credit.
Do not use Form 1116 to figure a
credit for taxes paid to the U.S. Virgin
Islands. Instead, use Form 8689,
Allocation of Individual Income Tax to
the U.S. Virgin Islands.
If you make this election:
You cannot carry over to or from any
other year any foreign taxes paid or
accrued in Text
a tax year
to which
below
is antheexcerpt from page 2, column
election applies (but carryovers to and
Nonresident aliens. If you are a
of instructions
IRS FORM
1116, 2015.
from other 1
years
are unaffected).for
See
nonresident alien, you generally cannot
the instructions for line 10, later.
take the credit. However, you may be
You are Foreign
still required to
take into
able to take
thea
credit if:
Taxes
Not Eligible
for
account the general rules for
You were a resident of Puerto Rico
Credit
determining
whether a tax is creditable.
during your entire tax year, or
See Foreign Taxes Eligible for a Credit
You pay or accrue tax to a foreign
and Foreign
Taxes
Not Eligible
a
country
U.S. possession on income
You
cannot
take for
a credit
for
the or
following
Credit, later.
from
foreign
sources that is effectively
foreign taxes.
You are still required to reduce the
connected with a trade or business in
taxes available for credit by any amount
the United States. But if you must pay
you would have
enteredpaid
on lineto
12aofforeign
taxcountry
to a foreign
country
1. Taxes
that
youor U.S.
Form 1116. See the instructions for
possession
on
income
do not legally owe, including
amounts from U.S.
line 12, later.
sources only because you are a citizen
eligible for refund by or
the
foreign
a resident
of country.
that country or U.S.
To make the election,
justnot
enterexercise
on
possession,
do not use that tax in
If you do
your available
the foreign tax credit line of your tax
figuring the amount of your credit.
remedies
to reduce
return (for example,
Form 1040,
line 48) the amount of foreign
See section 906 for more information
the smaller of (a)tax
yourtototal
foreign
or
what
youtaxlegally
owe,
a credit for
on the foreign tax credit allowed to a
(b) your regular tax
(for
example,
the
the excess amount is nonresident
not allowed.
alien individual.
total of lines 44 and 46 on Form 1040).
Credit
orofDeduction
Purpose
of Form
Example
. Country X withholds
$25
tax from
Instead of claiming a credit for eligible
a payment
made
the income
Who should
file. File Form
1116to
to you. Under
foreign taxes,
you can choose to deduct
claim the foreign
tax credit
if the
foreignStates
income and
taxes. Form 1040 filers
tax treaty
between
the United
election, earlier, does not apply and:
choosing
to
do
so
would deduct foreign
Country X, you owe only $15 and can claim
You are an individual, estate, or trust;
income taxes on Schedule A (Form
a refund from Country X for
theItemized
other $10.
and
1040),
Deductions. Generally,
take the
credit
for any eligible
Only $15 is eligible for theif you
foreign
tax
credit
foreign
taxes,
you
cannot
take any part
Tax Help
(whether or not you apply for a refund).
of that year's foreign taxes as a
deduction. However, even if you take
For more information about, or assistance with, figuring the foreign tax credit, the following IRS
the credit for eligible foreign taxes for
resources are available.
the year, you can take a deduction for:
IRS Contacts
• Call 267-941-1000 (overseas) (not toll free).
Foreign taxes not allowed as a credit
• Write to Internal Revenue Service, International Accounts,
because
of boycott provisions.
Philadelphia, PA 19255-0725.
Taxes paid to certain foreign
Publications
• Pub. 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.
countries for which a credit has been
• Pub. 514, Foreign Tax Credit for Individuals.
denied, as described in item (2) under
• Pub. 519, U.S. Tax Guide for Aliens.
Foreign Taxes Not Eligible for a Credit,
• Pub. 570, Tax Guide for Individuals With Income From U.S.
later.
Possessions.
Taxes on income or gain that are not
• Pub. 575, Pension and Annuity Income.
creditable because you do not meet the
Dec 29, 2015
Cat. No. 11441F