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Form 1118: Foreign Tax Credit—Corporations
IRS Form 1118 is used to compute a corporation’s foreign tax credit for certain taxes paid or accrued in foreign countries or U.S. territories by corporations. It requires attaching supporting schedules; for example, Section 960(d)(4) disallows a foreign tax credit under section 901 for 10% of any foreign income taxes paid...
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IRS Form 1118 - Foreign Tax Credit—Corporations
IRS Form 1118 is used to compute a corporation’s foreign tax credit for certain taxes paid or accrued in foreign countries or U.S. territories by corporations. It requires attaching supporting schedules; for example, Section 960(d)(4) disallows a foreign tax credit under section 901 for 10% of any foreign income taxes paid...
Risk Radar
Scan points- 1Confirm that Form 1118 is not used for Corporate Alternative Minimum Tax; use Form 4626 instead.
- 2Filing with an outdated revision of Form 1118 (Must use December 2025 revisions).
- 3Forgetting to attach Schedule A and Schedule J when loss accounts are adjusted.
- 4Calculating foreign tax credits without checking for the disallowance under section 960(d)(4).
- 5Using Form 1118 instead of Form 4626 for Corporate Alternative Minimum Tax (CAMT) calculation.
Plain English
This form helps corporations calculate how much money they can use from taxes paid to foreign governments or U.S. territories to offset their domestic tax bill. It ensures that companies do not pay the same tax twice on the same income when operating internationally. Filing this correctly is necessary for any corporation electing to claim a foreign tax credit.
Submission Date
- Filing date: 2025-12-22 14:10:35
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when a corporation elects the benefits of the foreign tax credit under section 901 or when computing a foreign tax credit for taxes paid or accrued in foreign countries or U.S. territories.
- Do not use it if no foreign source income was derived and no creditable foreign taxes were paid or accrued, unless the corporation has additions to, reductions to, or recapture of any new or existing overall foreign loss, overall domestic loss, or separate limitation loss accounts.
- Check Form 8833 instead when claiming a credit based on an international tax treaty.
Form selector
Use this form or another form?
Claiming credits for taxes paid through unrelated persons
Enter the “Unrelated code” if the corporation derived foreign source income and/or paid or accrued creditable foreign taxes from or through unrelated persons or their QBUs.
✓ Check that column 1(b) contains a valid related person code (e.g., RIC, NOL).
Claiming credits based on an international tax treaty
Complete and attach Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or Section 7701(b), to Form 1118.
✓ Failure to make this report may result in a $10,000 penalty.
Reporting changes in overall loss accounts
If the corporation has any additions to, reductions to, or recapture of any new or existing overall foreign loss, overall domestic loss, or separate limitation loss accounts, these schedules must be completed and attached.
✓ Ensure that all necessary related forms (Schedule A and Schedule J) are included with the tax return.
Schedule A and Schedule J (Form 1118)
Deadline or filing window
The source does not provide a specific filing deadline, day-count, or extension information for Form 1118. Users must reference the general instructions for their tax period.
Checklist
What you need before filling it out
Purpose
Compute foreign tax credit for taxes paid or accrued to foreign countries or U.S. territories · Instructions p.1
Filing Requirement (Losses)
Form 1118, Schedule A, and Schedule J (Form 1118) · Instructions p.1
Treaty Claiming
Form 8833 · Instructions p.6
Foreign Currency Reporting
Statement explaining conversion rate · Instructions p.9
Penalty for Treaty Failure
$10,000 penalty · Instructions p.6
Before you submit
- 1If claiming foreign tax credits, complete Form 1118 to compute the credit amount for certain taxes paid or accrued in foreign countries or U.S. territories.
- 2Any corporation electing benefits under section 901 must attach a completed Form 1118 to its income tax return.
- 3If a corporation has additions, reductions, or recaptures of overall foreign loss, overall domestic loss, or separate limitation loss accounts, it must complete and attach Form 1118, Schedule A, and Schedule J (Form 1118) to the income tax return.
- 4If a taxpayer undergoes a foreign tax redetermination under section 905(c), it must complete and attach Schedule L (Form 1118) to the income tax return for that year, regardless of whether the redetermination changes the U.S. tax liability.
- 5For general category income reported on Form 1118, enter code “GEN” on line a at the top of page 1.
- 6If claiming a credit based on a foreign tax treaty, complete and attach Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or Section 7701(b), to Form 1118.
- 7When filing an amended return due to a foreign tax redetermination that increases U.S. tax liability, use the appropriate process on Form 1120-X and attach both an amended Form 1118 and a statement detailing the taxpayer's name, address, identifying number, affected year(s), and dates of accrual or payment.
How to file this form
- 1Determine the filing requirement: If a corporation has additions to, reductions to, or recapture of any overall loss accounts, complete and attach Form 1118 along with Schedule A and Schedule J (Form 1118).
- 2If claiming credits based on an international tax treaty, complete and attach Form 8833 before completing the foreign tax credit calculations.
- 3Carefully fill in all required information for Form 1118, ensuring all amounts are reported in U.S. dollars unless a conversion statement is attached.
- 4Attach the completed Form 1118 to the corporation’s income tax return and submit with supporting schedules.
Known limitations
- 1Foreign branch category income is effective for tax years of U.S. persons beginning after December 31, 2017.
- 2The corporation may not carry a credit to a tax year for which it claimed a deduction, rather than a credit, for foreign income taxes paid or accrued.
- 3Amounts that do not constitute income under U.S. tax principles are treated as imposed on income described in section 904(d) (1)(B).
- 4Foreign branch category income does not include passive category income.
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is December 2025. For the latest information regarding Form 1118, users should visit IRS.gov/Form1118. Section 960(d)(4) was added to the Internal Revenue Code by Public Law 119-21 on July 4, 2025.
What changed or needs a fresh check
- Edition date — confirm the form revision date reads December 2025.
- Filing location — attach Form 1118 to the corporation’s income tax return.
- Required attachments — include Schedule A, Schedule J (Form 1118), and potentially Form 8833 if claiming a treaty credit.
- Reporting currency — report all amounts in U.S. dollars unless otherwise specified.
Quick Facts
Downloads
After you file
- 1Keep documentation supporting the claimed credit, such as receipts of payments or foreign tax returns for accrued taxes, because proof must be presented upon request by the IRS.
- 2If a provisional credit is subsequently refunded by the foreign country, this action creates a foreign tax redetermination under Regulations section 1.905-3(a), which may require amending filings.
- 3Be aware that interest is computed on any deficiency or overpayment resulting from the foreign tax adjustment (sections 6601 and 6611).
- 4If filing does not comply with required timing, penalty provisions of section 6689 may apply.
Sources
- SRCInstructions p.1 — Any corporation that elects the benefits of the foreign tax credit under section 901 must complete and attach Form 1118 to its income tax return.
- SRCInstructions p.1 — A corporation must complete and attach Form 1118, Schedule A, and Schedule J (Form 1118) if it has any additions to, reductions to, or recapture of any new or existing overall foreign loss, overall domestic loss, or separate limitation loss accounts.
- SRCInstructions p.2 — When completing a Form 1118 for foreign branch category income, enter the code “FB” on line a at the top of page 1.
- SRCInstructions p.4 — Creditable foreign taxes are treated as imposed on income described in section 904(d) (1)(B) if they are imposed on amounts that do not constitute income under U.S. tax principles.
- SRCInstructions p.6 — The corporation may not carry a credit to a tax year for which it claimed a deduction, rather than a credit, for foreign income taxes paid or accrued.
- SRCInstructions p.11 — Column 7 must include foreign source gross income from sales (net of returns and allowances and less costs of goods sold).
- SRCInstructions p.8 — For pre-1987 accumulated profits, the filer must include the dates and amounts of any dividend distributions or other inclusions made out of E&P, the rate of exchange on the date, and the amount of E&P from which such dividends were paid or inclusions were made.
Common confusion points
Do I have to file Form 1118 even if I didn't elect the foreign tax credit?
Yes, a corporation must complete and attach Form 1118, Schedule A, and Schedule J (Form 1118) if it has any additions to, reductions to, or recapture of any new or existing overall foreign loss, overall domestic loss, or separate limitation loss accounts.
→ Check the requirements regarding changes to overall foreign loss, overall domestic loss, or separate limitation loss accounts.
What is 'foreign branch category income'?
Foreign branch category income relates to one or more qualified business units (QBUs) in one or more foreign countries; when completing Form 1118 for this income, enter the code “FB” on line a at the top of page 1.
→ Ensure you are tracking QBU income from foreign countries.
What specific sales should I include in Column 7?
Column 7 must include foreign source gross income from sales (net of returns and allowances and less costs of goods sold) and the foreign source portion of section 863(b) sales.
→ Do not include inventory produced in the United States and sold overseas.
Can I claim a credit for every year, even if I claimed a deduction?
No, the corporation may not carry a credit to a tax year for which it claimed a deduction, rather than a credit, for foreign income taxes paid or accrued.
→ Verify that you are claiming a credit, not a deduction, for the specific tax year.
Does passive income count toward the foreign branch category?
No, foreign branch category income does not include passive category income.
→ Confirm that all income included is from qualified business units (QBUs) and excludes passive income.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- If carrying back the excess credit to an earlier year, file an amended tax return with a revised Form 1118 and schedules (including a revised Schedule K (Form 1118)).
Questions about IRS Form 1118
What is IRS Form 1118 used for?
This form helps corporations calculate how much money they can use from taxes paid to foreign governments or U.S. territories to offset their domestic tax bill. It ensures that companies do not pay the same tax twice on the same income when operating internationally. Filing this correctly is necessary for any corporation electing to claim a foreign tax credit.
Who must file IRS Form 1118?
Any corporation that elects the benefits of the foreign tax credit under section 901 must complete and attach Form 1118 to its income tax return. Additionally, if a corporation has additions to, reductions to, or recapture of any overall foreign loss, overall domestic loss, or separate limitation loss accounts, it must also complete and attach Schedule A and Schedule J (Form 1118).
What information does IRS Form 1118 require?
The form computes the corporate foreign tax credit for taxes paid or accrued in foreign countries or U.S. territories. It requires accompanying schedules, including Schedule A, Schedule J (Form 1118), Schedule L, and Schedule G.
Where do I file IRS Form 1118?
The instructions direct users to IRS.gov/Form1118 for the latest information regarding developments related to Form 1118.
How do I complete IRS Form 1118?
The form must be completed using the December 2025 revision of Form 1118. The corporation must compute its foreign tax credit and attach supporting schedules like Schedule A and Schedule J (Form 1118) if loss accounts are adjusted.
What happens if IRS Form 1118 is filed incorrectly?
Failure to complete and attach required schedules, such as Schedule A or Schedule J (Form 1118) when loss accounts change, may result in an incomplete tax filing.
Do I have to file Form 1118 even if I didn't elect the foreign tax credit?
Yes, a corporation must complete and attach Form 1118, Schedule A, and Schedule J (Form 1118) if it has any additions to, reductions to, or recapture of any new or existing overall foreign loss, overall domestic loss, or separate limitation loss accounts. Check the requirements regarding changes to overall foreign loss, overall domestic loss, or separate limitation loss accounts.
What is 'foreign branch category income'?
Foreign branch category income relates to one or more qualified business units (QBUs) in one or more foreign countries; when completing Form 1118 for this income, enter the code “FB” on line a at the top of page 1. Ensure you are tracking QBU income from foreign countries.
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