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IRSOther IRS Forms (1000–1999)

Official form guide

Form 1116-SB: 1116 (Schedule B)

IRS Form 1116 is used to calculate the foreign tax credit for individuals, estates, and trusts. It is filed with Form 1040 when you have paid or accrued foreign taxes on foreign-source income and want to claim a credit against your U.S. tax liability. The form helps prevent double taxation of the same income.

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Form Overview

IRS Form 1116-SB - 1116 (Schedule B)

IRS Form 1116 is used to calculate the foreign tax credit for individuals, estates, and trusts. It is filed with Form 1040 when you have paid or accrued foreign taxes on foreign-source income and want to claim a credit against your U.S. tax liability. The form helps prevent double taxation of the same income.

The form captures foreign income, foreign taxes paid or accrued, limitations based on U.S. tax liability, and the allowable credit amount. It also requires details about the country, type of income, and any carrybacks or carryforwards.

Risk Radar

Scan points
  • 1Using an expired edition of Form 1116 can cause the IRS to reject your return.
  • 2Using wrong exchange rate for foreign taxes
  • 3Missing Form 1116 when claiming credit
  • 4Overstating foreign income leading to excess credit
  • 5Failing to carry forward unused credit

Plain English

If you earned money outside the United States and paid tax to a foreign government on that money, you can use Form 1116 to reduce your U.S. tax bill. The form walks you through figuring out how much of the foreign tax you can claim as a credit. You attach the completed form to your annual tax return.

Submission Date

  • Filing date: 2023-01-04 22:10:49
  • Preparation window: collect IDs, supporting records, and signatures in advance.
  • Final review: verify names, dates, and required fields before submission.

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Glossary Terms

liabilityoutsideforeignincomemoney

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What this form is for

  • Use this form when you have paid foreign taxes on foreign-source income and want to claim a credit.
  • Do not use this form if you only want to deduct foreign taxes as an itemized deduction (use Schedule A instead).
  • Check Form 1116 instructions if you have income from Puerto Rico or possession territories; special rules may apply.

Form selector

Use this form or another form?

You want to deduct foreign taxes rather than claim a credit

Determines if deduction is more beneficial

✓ Compare credit vs deduction outcome

Schedule A (Itemized Deductions)

You have foreign housing expenses

May exclude income instead of crediting taxes

✓ Review eligibility for exclusion

Form 2555 (Foreign Earned Income Exclusion)

You received a foreign pension distribution

May need to report taxable amount

✓ Verify treaty benefits

Form 1040, line 4b

Deadline or filing window

Form 1116 follows the same deadline as your Form 1040, generally April 15. If you obtain an extension, the form is due with the extended return. Check the IRS calendar for any year‑specific changes.

  • —Foreign taxes paid | Convert to USD using yearly average exchange rate | USD foreign tax amount | Use IRS‑published rates; using spot rate may cause error
  • —Foreign source income | Multiply by applicable U.S. tax rate | Tentative credit limit | Ensure income is correctly categorized
  • —Carryforward from prior year | Add to current year credit | Total available credit | Do not exceed overall tax liability

Checklist

What you need before filling it out

1

Foreign income

Foreign wage statements or 1099‑equivalent · Employer or foreign financial institution

⚠ Omitting income leads to excess credit✕ High
2

Foreign tax receipts

Official foreign tax return or payment proof · Foreign tax authority

⚠ Using estimated amounts without proof✕ Medium
3

Exchange rate documentation

IRS yearly average exchange rate tables · IRS.gov

⚠ Using incorrect rate✕ Medium
4

Prior year carryforward

Prior year Form 1116, line for carryforward · Your own records

⚠ Forgetting to carry forward✕ Medium
5

Limitation calculation worksheet

Form 1116 instructions worksheet · Instructions packet

⚠ Math error in limitation✕ Low

Before you submit

  1. 1Verify you are using the current year’s edition of Form 1116
  2. 2Confirm all foreign income is reported on Form 1040
  3. 3Check that foreign taxes are converted to U.S. dollars using the correct exchange rate
  4. 4Complete the limitation calculation accurately
  5. 5Ensure any carryforward from prior years is included
  6. 6Attach Form 1116 to your Form 1040 before mailing or e‑filing
  7. 7Keep copies of foreign tax receipts and income statements for at least three years
  8. 8Sign and date Form 1040 (Form 1116 does not need a separate signature)
  9. 9If filing electronically, confirm the software includes Form 1116 in the return
  10. 10Review the IRS instructions for any special rules for your country of income

How to file this form

  1. 1Collect foreign income documents and foreign tax payment records
  2. 2Obtain the current Form 1116 and its instructions from IRS.gov
  3. 3Fill out Part I: report foreign income by category and country
  4. 4Complete Part II: report foreign taxes paid or accrued and convert to USD
  5. 5Work through Part III: calculate the credit limitation and allowable credit
  6. 6Transfer the credit amount to Form 1040, Schedule 3, line 1
  7. 7Attach Form 1116 to your tax return and submit by the deadline
  8. 8Store all supporting documents with your tax records

Known limitations

  1. 1The form does not allow a credit for foreign taxes on income excluded under Form 2555
  2. 2The credit is limited to the U.S. tax attributable to the foreign income; excess cannot be refunded
  3. 3Certain foreign taxes (e.g., VAT, sales taxes) are not creditable
  4. 4The form cannot be used to claim a credit for taxes paid to sanctioned countries without IRS approval
  5. 5Married couples filing separately must each file their own Form 1116 if applicable

Field map

Compact field-by-field guide

6 fields

General Info

2 items

Taxpayer Name and TIN

Full legal name and taxpayer identification number (SSN or EIN).

Requiredtext
Address

Current mailing address.

Requiredtext

Details

2 items

Required Information

Complete all applicable sections of this form according to the official IRS instructions.

Requiredtext
Amount (if applicable)

Enter the relevant dollar amount if this form involves tax calculation.

amount

Certification

1 items

Certification Statement

Read and acknowledge any certifications required by this form.

Requiredcheckbox

Signatures

1 items

Signature

Sign and date. Unsigned forms cannot be processed.

Requiredsignature
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Current form status
IRS

The most recent edition of Form 1116 is dated for the current tax year; check the IRS website for the latest version before filing.

What changed or needs a fresh check

  • Edition date – ensure it matches the tax year
  • Fee – there is no filing fee for the form itself
  • Mailing address – use the address in your Form 1040 instructions
  • Deadline – aligns with your tax return due date (including extensions)
  • Signature – sign Form 1040; Form 1116 does not require a separate signature
  • Required evidence – keep foreign tax receipts and income statements

Form Preview

Form 1116-SB page 1

Page 1

Form 1116-SB page 2

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Quick Facts

U.S. citizens, resident aliens, estates, and trusts that have foreign-source income and have paid foreign taxes file Form 1116. Nonresident aliens generally do not use this form unless they have effectively connected income.
The form captures foreign income, foreign taxes paid or accrued, limitations based on U.S. tax liability, and the allowable credit amount. It also requires details about the country, type of income, and any carrybacks or carryforwards.
Form 1116 is filed each year with your Form 1040, typically by the April 15 deadline (or extended deadline). It must be attached to the return for the tax year in which the foreign taxes were paid or accrued.
Submit the completed Form 1116 attached to your Form 1040 (or Form 1040-SR) and mail it to the IRS address indicated in the tax return instructions, or file electronically if you use approved tax software.
Mistakes on Form 1116 can lead to an incorrect foreign tax credit, resulting in either an unexpected tax bill or a delayed refund. Errors may also trigger IRS notices or audits.
Gather your foreign income statements and foreign tax receipts. Complete the form’s parts: report foreign income, convert foreign taxes to U.S. dollars, apply the limitation calculation, and determine the credit. Attach the form to your tax return and keep copies of all supporting documents.

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After you file

  1. 1Keep a copy of the filed Form 1116 with your tax return
  2. 2Retain foreign tax receipts and income statements for at least three years from the filing date
  3. 3Monitor any IRS notices regarding the foreign tax credit
  4. 4Track any unused credit carryforward to future years
  5. 5If you receive a refund, verify it matches the claimed credit amount
  6. 6Update your records if you receive corrected foreign tax statements
  7. 7Consider reviewing the credit limitation calculation if your foreign income changes significantly
  8. 8Store the confirmation or acceptance notice if you filed electronically

Sources

  • SRCPurpose: Used to calculate foreign tax credit for specific types of income or specific foreign taxes that may require special allocation or apportionment.
  • SRCFiling requirement: Must be attached to Form 1116 when claiming foreign tax credit for certain types of income or when special calculations are needed.
  • SRCIncome categories: Contains sections for different types of foreign income (such as passive income, general category income, etc.) that need to be separately reported.
  • SRCTax allocation: Includes calculations for allocating foreign taxes to different categories of income.
  • SRCLimitation year: References the tax year for which the foreign taxes were paid and are being claimed as a credit.
  • SRCForeign tax paid space: Has specific fields to report the amount of foreign taxes paid to each country.
  • SRCCurrency conversion: May require conversion of foreign currency amounts to U.S. dollars.
  • SRCTaxpayer identification: Contains fields for taxpayer's name, address, and Social Security Number or other taxpayer identification number.
  • SRCSignature block: Requires taxpayer signature and date to certify the information is correct.
  • SRCInstructions reference: Typically references the instructions for Form 1116 for detailed guidance on completing Schedule B.

Common confusion points

Foreign tax credit vs. deduction

Users confuse when to credit vs deduct

→ Compare outcomes using Form 1116 and Schedule A

Which foreign taxes are creditable

Misunderstanding that VAT or sales taxes count

→ Refer to IRS Publication 514 for list of creditable taxes

Exchange rate selection

Using daily rate instead of yearly average

→ Use IRS‑published yearly average rates

Carryforward mechanics

Forgetting to apply unused credit to future years

→ Complete the carryforward line on Form 1116 each year

Income sourcing rules

Misclassifying income as U.S. vs foreign

→ Follow IRS source rules in Publication 515

Filing status impact

Assuming joint filing doubles credit

→ Each spouse’s credit is calculated separately on joint return

Form attachment

Thinking Form 1116 stands alone

→ Must be attached to Form 1040

Extension effect

Believing extension changes credit calculation

→ Extension only extends filing deadline, not credit limits

Workflow map

Related forms and next steps

4 signals

Before

Form 1040 (main return)

Current

1116-SB

After

Form 1040, Schedule 3 line 1 reflects the credit

Often used with

Schedule 3 (Additional Credits) and Form 1116

⚠ If something goes wrong

  • IRS Notice CP2000 or audit notice regarding foreign tax credit

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Public DomainCreated by the U.S. federal government. Not subject to copyright (17 USC § 105). Freely copyable without restriction.
Public DomainCreated by the U.S. federal government. Not subject to copyright (17 USC § 105). Freely copyable without restriction.
Public DomainCreated by the U.S. federal government. Not subject to copyright (17 USC § 105). Freely copyable without restriction.
Public DomainCreated by the U.S. federal government. Not subject to copyright (17 USC § 105). Freely copyable without restriction.
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