Publication 514 (2006), Foreign Tax Credit for Individuals

Publication 514 - Additional Material

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Table of Contents

Worksheet Instructions. Additional Foreign Tax Credit on U.S. Income


STEP I
Figure the estimated tax on U.S. source income using U.S. source rules.
	Lines 1-7 — Enter the gross amount for each type of income in Column A, and the net amount in column B.
	Line 9 — Enter the amount from Form 1040, line 44.

STEP II
Determine the amount of tax that the United States is allowed to collect at source under the treaty on income of residents of the other country who are not U.S. citizens.
	PART A — Income fully taxable by the United States. Identify the type and amount on line 13a.
	PART B — Income for which treaty limits U.S. tax at source.
	Lines 14-15 — Identify each type and amount of income. Use the specified treaty rate. (See Publication 901, U.S. Tax Treaties.)
	PART C — Identify the items not taxable at source by the United States under the treaty.

STEP III
Figure the amount of the additional credit for foreign taxes paid or accrued on U.S. source income. The additional credit is limited to the difference between the estimated U.S. tax (Step I) and the greater of the allowable U.S. tax at source (Step II) or the foreign tax credit allowed by the residence country (line 18).
	Line 17 — Enter the amount of the residence country tax on your U.S. source income before reduction for foreign tax credits. If possible, use the fraction of the pre-credit residence country tax which U.S. source taxable income bears to total taxable income. Otherwise, report that fraction of the pre-credit foreign tax which gross U.S. income bears to total gross income for foreign tax purposes.
	Line 21 — This amount may be claimed as a foreign tax credit on Form 1116. Complete Form 1116 according to the instructions. Add the additional credit to line 33, Part IV, of Form 1116 and report that total on your Form 1040. File this worksheet with your Form 1040 as an attachment to Form 1116.