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Publication 514, Foreign Tax Credit for Individuals

• Important Reminders
• Choosing To Take Credit or Deduction
  • Choice Applies to All Qualified Foreign Taxes
  • Making or Changing Your Choice

• Why Choose the Credit?
  • Credit for Taxes Paid or Accrued
  • Foreign Currency and Exchange Rates
  • Foreign Tax Redetermination
    • Time Limit on Refund Claims

• Who Can Take the Credit?
  • U.S. Citizens
  • Resident Aliens
  • Nonresident Aliens

• What Foreign Taxes Qualify for the Credit?
  • Tax Must Be Imposed on You
  • You Must Have Paid or Accrued the Tax
  • Tax Must Be the Legal and Actual Foreign Tax Liability
  • Tax Must Be an Income Tax (or Tax in Lieu of Income Tax)
    • Income Tax
    • Taxes in Lieu of Income Taxes

• Foreign Taxes for Which You Cannot Take a Credit
  • Taxes on Excluded Income
    • Foreign Earned Income and Housing Exclusions
    • Taxes on Income From Puerto Rico Exempt From U.S. Tax
    • Possession Exclusion
    • Extraterritorial Income Exclusion

  • Taxes for Which You Can Only Take An Itemized Deduction
    • Taxes Imposed By Sanctioned Countries (Section 901(j) Income)
    • Taxes Imposed on Certain Dividends
    • Taxes in Connection With the Purchase or Sale of Oil or Gas

  • Taxes on Foreign Oil Related Income
  • Taxes on Foreign Mineral Income
  • Taxes From International Boycott Operations
  • Taxes on Foreign Oil and Gas Extraction Income
  • Taxes of U.S. Persons Controlling Foreign Corporations and Partnerships

• How To Figure the Credit
  • Limit on the Credit
  • Separate Limit Income
    • Passive Income
    • High Withholding Tax Interest
    • Financial Services Income
    • Shipping Income
    • DISC Dividends
    • FSC Distributions
    • Lump-Sum Distribution
    • Section 901(j) Income
    • Income Re-Sourced By Treaty
    • General Limitation Income

  • Allocation of Foreign Taxes
  • Foreign Taxes From a Partnership or an S Corporation
  • Figuring the Limit
    • Determining Source of Income
    • Determining Taxable Income From Sources Outside the United States

  • Capital Gains and Losses
    • Adjustments to Foreign Source Capital Gains and Losses

  • Allocation of Foreign Losses
    • Recapture of Foreign Losses

  • Tax Treaties

• Carryback and Carryover
  • Time Limit on Tax Assessment
  • Claim for Refund
  • Taxes All Credited or All Deducted
  • Married Couples
    • Allocations Between Husband and Wife
    • Joint Return Filed in a Deduction Year

• How To Claim the Credit
  • Form 1116
  • Records To Keep
  • Alternative Minimum Tax

• Simple Example - Filled-In Form 1116
  • Part I - Taxable Income or Loss From Sources Outside the United States (for Category Checked Above)
  • Part II - Foreign Taxes Paid or Accrued
  • Part III - Figuring the Credit
  • Part IV - Summary of Credits From Separate Parts III

• Comprehensive Example - Filled-In Form 1116
  • Forms 1116
  • Computation of Taxable Income
  • Part I - Figuring Taxable Income or Loss From Sources Outside the United States (for Category Checked Above)
  • Part II - Foreign Taxes Paid or Accrued
  • Part III - Figuring the Credit
  • Part IV - Summary of Credits From Separate Parts III
  • Unused Foreign Taxes

• How To Get Tax Help

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Index

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A

• Accrual foreign taxes, adjustments
• Accrual method of accounting
• Alternative minimum tax
• American Samoa, resident of

B

• Bankruptcy, effect of
• Beneficiary
• Bond, income tax
• Boycotting countries

C

• Capital gains and losses
• Carryback and carryover, Allocations between husband and wife
• Carryback and carryover, Claim for refund
• Carryback and carryover, Joint return-deduction year
• Carryback and carryover, Taxes all credited or deducted
• Choice to take credit or deduction, Choice applied to all qualified foreign taxes
• Citizen of U.S. possession
• Classes of gross income
• Controlled foreign corporation shareholder
• Controlled foreign corporation shareholder
• Credit, How to claim
• Credit, How to figure

D

• Deduction for foreign taxes that are not income taxes
• Dual-capacity taxpayers

E

• Economic benefits
• Examples, Comprehensive
• Examples, Simple
• Excluded income, Taxes on
• Exemption from foreign tax credit limit
• Export financing interest

F

• Foreign country
• Foreign currency and exchange rates
• Foreign income, translating
• Foreign losses, Recapture of
• Foreign oil and gas extraction income, taxes on
• Foreign tax refund
• Foreign tax refund
• Foreign tax(es), Allocation to income categories
• Foreign tax(es), For which you cannot take a credit
• Foreign tax(es), Imposed on foreign refund
• Foreign tax(es), Qualifying for credit
• Form, 1040X
• Form, 1116
• Form, 5471, 8865
• Form, 5713
• Form, 8833
• Form, 8873

H

• High-taxed income

I

• Income tax
• Interest
• Interest expense, apportioning
• International boycott
• Itemized deduction
• Itemized deduction limit

L

• Limit on credit
• Losses, foreign, Allocation of

M

• Making or changing your choice
• Married couples, Carryback and carryover
• Married couples, Joint return
• Mineral income, foreign,
• Mutual fund distributions
• Mutual fund distributions

N

• Nonresident aliens
• Notice to the IRS of change in tax

O

• Oil related income, foreign
• Overall foreign loss

P

• Partner
• Penalties, Failure to file Form 5471, 8865
• Penalties, Failure to file Form 5713
• Penalties, Failure to notify, foreign tax change
• Penalties, Failure to report treaty information
• Pension, employment, and disability fund payments
• Personal property, sales or exchanges of
• Purchase or sale of oil or gas, taxes in connection with

R

• Rate of exchange
• Records to keep
• Redetermination of foreign tax
• Reporting requirements (international boycott)
• Resident aliens

S

• S corporation shareholder
• S corporation shareholder
• Section 901(j) sanctioned income
• Separate limit income
• Separate limit income, DISC dividends
• Separate limit income, Financial services income
• Separate limit income, FSC distributions
• Separate limit income, General limitation income
• Separate limit income, High withholding tax interest
• Separate limit income, Income re-sourced by treaty
• Separate limit income, Lump-sum distribution
• Separate limit income, Passive income
• Separate limit income, Section 901(j) income
• Separate limit income, Shipping income
• Soak-up taxes
• Social security taxes
• Source of income, rules for determining
• Subsidy
• Suggestions

T

• Tax treaties
• Taxable income from sources outside the U.S., determination of
• Taxes, Excluded income
• Taxes, In lieu of income taxes
• Taxes, On dividends
• Taxes, Paid or accrued
• Taxpayer Advocate
• TTY/TDD information

U

• U.S. citizens
• U.S. possessions
• Unused foreign tax credits, carryback or carryover
• Unused foreign tax credits, carryback or carryover

W

• Wages
• When refunds can be claimed
• When tax can be assessed
• Who can take the credit
• Why choose the credit

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