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Form 1116 Foreign Tax Credit (Individual

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Form 1116 Foreign Tax Credit (Individual

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Purpose of Form

Who should file. File Form 1116 to claim the foreign tax credit if the election, earlier, does not apply and: You are an individual, estate, or trust; and You paid or accrued certain foreign taxes to a foreign country or U.S. possession.

 

 Nonresident aliens.

If you are a nonresident alien, you generally cannot take the credit. However, you may be able to take the credit if: You were a resident of Puerto Rico during your entire tax year, or You pay or accrue tax to 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 tax to a foreign country or U.S. possession on income from U.S. sources only because you are a citizen or a resident of that country or U.S. possession, do not use that tax in figuring the amount of your credit.

Credit or Deduction

Instead of claiming a credit for eligible foreign taxes, you can choose to deduct foreign income taxes. Form 1040 filers choosing to do so would deduct foreign income taxes on Schedule A (Form 1040), Itemized Deductions. Generally, if you take the credit for any eligible foreign taxes, you cannot take any part of that year's foreign taxes as a deduction. However, even if you take the credit for eligible foreign taxes for the year, you can take a deduction for: Foreign taxes not allowed as a credit because of boycott provisions.

Form 1116 Foreign Tax Credit


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Views: 510 Created on: Jun 15, 2013
Date updated: Aug 19, 2015

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