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Form 1120-FH: 1120-F (Schedule H)
IRS Form 1120-F is used for foreign corporations to report income attributable to a U.S. trade or business via Schedule H. It must be completed by any foreign corporation that is (or is treated as) engaged in a trade or business within the United States at any time during the tax year.
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IRS Form 1120-FH - 1120-F (Schedule H)
IRS Form 1120-F is used for foreign corporations to report income attributable to a U.S. trade or business via Schedule H. It must be completed by any foreign corporation that is (or is treated as) engaged in a trade or business within the United States at any time during the tax year.
Risk Radar
Scan points- 1Do not make adjustments on line 2 to reflect book-to-tax adjustments for any home office interest expense; these adjustments belong on line 4.
- 2Failing to include Schedule H and attach it to Form 1120-F when the foreign corporation is engaged in U.S. trade or business.
- 3Incorrectly calculating the total deductible expenses reported on non-Schedule L books for line 20, which must be allocated/apportioned to ECI.
- 4Reporting home office deductions that are also reported on Schedule L books; such deductions must be excluded from line 1a.
- 5Omitting the required ratio of effectively connected gross income, U.S. assets, and U.S. personnel for lines 21 through 23.
Plain English
This form helps foreign companies prove how much of their global income is actually related to their operations within the United States. By filing this, the company tracks specific expenses and calculates which portions must be taxed by U.S. authorities.
Submission Date
- Filing date: 2026-01-07 11:10:40
- 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 foreign corporation is required to file Form 1120-F and is engaged in a trade or business within the United States at any time during the tax year, or when a foreign corporation is a partner in a partnership that has deductions allocated to Effectively Connected Income (ECI).
- Do not use it when filing a protective return under Regulations section 1.882-4(a)(3)(vi), as Schedule H need not be completed or attached.
- Check Form 1120-F for the main form, which governs the reporting of these deductions.
Deadline or filing window
Not stated in the official source.
Checklist
What you need before filling it out
Total expenses on the books of the home office (Line 1a)
Amounts from corporate books and records · Part I, Line 1a
Adjustments for U.S. tax principles (Line 2)
Statement detailing adjustments · Part I, Line 2
Total deductible expenses (Line 31)
Combination of lines 29 and 30 · Form 1120-F, Schedule H
Interbranch interest expense (Line 32b)
Interbranch expenses included on line 31 · Part II, Line 32b
Deductible expenses allocated/apportioned to ECI or non-ECI (Line 37)
Reconciliation of allocation amounts (a) and (b) · Part II, Line 37
Other documentation used for Parts I and II (Line 28)
Statement listing other financial records (e.g., regulatory reports or functional analyses) · Part I, Line 28
Before you submit
- 1Confirm that results reported on Schedule H are included on Form 1120-F, Section II, line 26, and for banks only, on Schedule M-3 (Form 1120-F), Part III, line 31.
- 2If completing Part I using a functional currency other than U.S. dollars, specify the foreign currency in the designated space.
- 3For bad debt expense remaining after adjustments on line 2, attach a statement listing the adjustment amount for expenses included on line 1a of entities whose expenses are not includible in U.S. tax purposes.
- 4Ensure that line 2 adjustments do not include book-to-tax adjustments for home office interest expense; these adjustments must be reported on line 4 instead.
- 5Eliminate interbranch income and expenses recorded between separate sets of books when calculating the combined reports for line 29.
- 6Enter on line 30 the total adjustments necessary to make amounts on line 29 deductible for U.S. tax purposes, excluding any items reportable on lines 32a through 35.
- 7Calculate the total of special rule deductions by adding the amounts entered on lines 32a through 35 and entering this sum on line 36.
How to file this form
- 1Complete Part I by entering total expenses on the books of the home office (Line 1a) and documenting any necessary adjustments for U.S. tax principles (Lines 2, 30).
- 2Calculate Total deductible expenses by summing line 29 and line 30 to determine the amount reported on line 31.
- 3Complete Part II by detailing third-party interest expense (Line 32a), interbranch interest expense (Line 32b), bad debt expense (Line 33), and other expenses, culminating in the total deductible expenses allocated to ECI or non-ECI on line 37.
- 4Attach Schedule H (Form 1120-F) to the main Form 1120-F when filing.
Known limitations
- 1A foreign corporation does not need to complete Schedule H if it files a protective Form 1120-F under Regulations section 1.882-4(a)(3)(vi) (Instructions p.1).
- 2Schedule H is not required for a foreign corporation that files Form 1120-F pursuant to a U.S. income tax treaty to report business profits attributable to a U.S. permanent establishment and applies OECD Transfer Pricing Guidelines in lieu of the ECI and expense allocation and apportionment rules of section 882(c) and Regulations sections 1.861-8 and 1.861-17 and Temporary Regulations section 1.861-8T (Instructions p.1).
- 3Schedule H is not required if the foreign corporation files a protective Form 1120-F under certain treaty-based reporting conditions described in Instructions p.1.
Field map
Compact field-by-field guide
Entity Info
2 items
Full legal name of the corporation and its Employer Identification Number.
Current mailing address and date of incorporation.
Income
3 items
Total revenue from business operations before deducting costs.
Direct costs attributable to producing goods sold by the corporation.
Gross receipts minus cost of goods sold and returns/allowances.
Deductions
1 items
Sum of all business expenses including compensation, rent, interest, taxes, and depreciation.
Tax
2 items
Total income minus total deductions.
Tax calculated on taxable income using the applicable corporate tax rate, minus any credits.
Signatures
1 items
An authorized corporate officer must sign and date the return.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is 20/25. For the latest information about developments related to Schedule H (Form 1120-F), filers should visit IRS.gov/Form1120F.
What changed or needs a fresh check
- Edition date — confirm the revision is 20/25.
- Fee — Not stated in the official source.
- Mailing address — Not stated in the official source.
- Signature — Not stated in the official source.
Quick Facts
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After you file
- 1Retain records detailing temporary differences (such as costs capitalized under section 263A, depreciation and amortization) used for adjustments to book expenses reported on Schedule H line 2.
- 2Keep the set or sets of books of the corporation's U.S. trade or business or its U.S. branch (
- 3Schedule L books
- 4) in case of review.
- 5Maintain documentation supporting any special rules applied when calculating amounts entered on lines 32a through 35, as these bypass general allocation and apportionment rules.
- 6Retain records showing the calculation of interest expense adjustments included on line 4 and allocated to ECI reported on Schedule I.
Sources
- SRCInstructions p.1 — Any foreign corporation that is (or is treated as) engaged in a trade or business within the United States at any time during the tax year must complete Schedule H and attach it to its Form 1120-F.
- SRCInstructions p.1 — A foreign corporation that is a partner in a partnership that has deductions allocated to ECI under Regulations section 1.861-8 must also complete Schedule H and attach it to its Form 1120-F.
- SRCInstructions p.1 — If the corporation files Form 1120-F pursuant to an applicable U.S. income tax treaty, Form 8833 must be completed and attached if OECD Transfer Pricing Guidelines are applied (Instructions p.1).
- SRCInstructions p.2 — Part I of Schedule H may be completed in U.S. dollars or in the foreign corporation's functional currency; if using a functional currency other than U.S. dollars, specify it in the heading (Instructions p.2).
- SRCInstructions p.3 — The exchange rate for lines 15 and 17 must be rounded to at least five places, but more than five places if failure to do so would materially distort the amount (Instructions p.3).
- SRCInstructions p.5 — Third-party interest expense and interbranch interest expense included on line 29 are adjusted separately on lines 32a and 32b, not on line 30 (Instructions p.5).
Common confusion points
Do I need to file Schedule H if I am a partner in a partnership with deductions allocated to ECI?
Yes, any foreign corporation that is a partner in a partnership that has deductions allocated to ECI under Regulations section 1.861-8 must complete Schedule H and attach it to its Form 1120-F (Instructions p.1).
Do I have to adjust my home office interest expense on line 2?
No, do not make adjustments on line 2 to reflect book-to-tax adjustments for any home office interest expense included on line 1a; this adjustment is reported on line 4 instead (Instructions p.2).
How are third-party and interbranch interest expenses handled?
These expenses included on line 29 are adjusted separately on lines 32a and 32b, not on line 30 (Instructions p.5).
If I report business profits under a U.S. income tax treaty, do I still need to file Schedule H?
No, if the corporation files Form 1120-F using treaty rules that apply OECD Transfer Pricing Guidelines, Schedule H is generally not required (Instructions p.1).
What currency should I use for Part I of Schedule H?
You may complete Part I in U.S. dollars or in the foreign corporation's functional currency; if using a functional currency other than U.S. dollars, specify it in the heading (Instructions p.2).
When calculating exchange rates for lines 15 and 17, how should rounding be handled?
The exchange rate must be rounded to at least five places, but round to more than five places if failure to do so would materially distort the exchange rate or the equivalent amount of U.S. dollars (Instructions p.3).
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Form 8833 — Must be completed and attached to Form 1120-F if the corporation applies the OECD Transfer Pricing Guidelines pursuant to an applicable U.S. income tax treaty (Instructions p.1).
Questions about IRS Form 1120-FH
What is IRS Form 1120-FH used for?
This form helps foreign companies prove how much of their global income is actually related to their operations within the United States. By filing this, the company tracks specific expenses and calculates which portions must be taxed by U.S. authorities.
Who must file IRS Form 1120-FH?
Any foreign corporation that is required to file Form 1120-F and is (or is treated as) engaged in a trade or business within the United States must complete Schedule H and attach it to its Form 1120-F. Additionally, any foreign corporation that is a partner in a partnership with deductions allocated to ECI under Regulations section 1.861-8 must also complete and attach Schedule H.
What information does IRS Form 1120-FH require?
The form collects details on home office deductions and reports the allocation and apportionment of expenses recorded on books used for the U.S. trade or business. Specific sections include Part I, which determines the reporting currency, and Part IV, which uses Schedule L books to report expense allocations.
How do I complete IRS Form 1120-FH?
First, the filer must determine if Part I will be completed in U.S. dollars or a functional currency. Deductions related to home office operations are entered on lines such as 1a, while allocations of expenses to ECI and non-ECI are reported using Part IV.
What happens if IRS Form 1120-FH is filed incorrectly?
The instructions do not specify penalties for incorrect filing; they focus on proper required reporting procedures and ensuring that results reported on Schedule H are included on Form 1120-F, Section II, line 26.
Do I need to file Schedule H if I am a partner in a partnership with deductions allocated to ECI?
Yes, any foreign corporation that is a partner in a partnership that has deductions allocated to ECI under Regulations section 1.861-8 must complete Schedule H and attach it to its Form 1120-F (Instructions p.1).
Do I have to adjust my home office interest expense on line 2?
No, do not make adjustments on line 2 to reflect book-to-tax adjustments for any home office interest expense included on line 1a; this adjustment is reported on line 4 instead (Instructions p.2).
How are third-party and interbranch interest expenses handled?
These expenses included on line 29 are adjusted separately on lines 32a and 32b, not on line 30 (Instructions p.5).
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