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FAQsForeign Tax CreditUS Tax Form 1116FTC - Foreign Tax Credit
The Foreign Tax Credit (Form 1116) is an expat tax benefit that gives you a dollar-for-dollar credit from the income taxes paid to your host country against your US tax liability. It’s often used when your host country has a higher tax rate than the US.
How to fill out Form 1116 (Foreign Tax Credit)
- Log in to your account.
- Click the “Your Expat Taxes” section in the side navigation pane. This will reveal the sub-menu.
- Select “Foreign and Other Income”.
- Click the boxes to select your sources of Worldwide Income and click “Save”. Note, you should skip any forms of income already entered with your US Tax Forms.
- Input the details for each type of foreign income earned.
- At the bottom of the page, you’ll be asked “Was this income subject to taxes outside of the US?” - select “Yes” to enter the amount of foreign taxes withheld from your income.
- Click “Save”.
- After entering all your foreign income, click “Foreign Taxes Paid” for the summary of all income subject to taxes outside of the US.
- Check that the amounts of Income and Taxes Paid for Earned Income and Investment Income are correct.
- The IRS splits worldwide income into categories Earned Income and Investment Income because they are subject to different tax rates and credits.
- Click the lightbulb icon for help on how to calculate how much income tax was paid in each income category.
- Note that you have the option to select the checkbox “I cannot split out the income tax for this income separately, however I know the total amount for this category”.
- If you’d like one of our Tax Professionals to allocate the foreign income taxes on your behalf, you can check the option to upgrade to the Reviewed or Premium plan.
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