Form 1116 Foreign Tax Credit Calculator 2026 β€” Detailed FTC Worksheet

Calculate Form 1116 foreign tax credit by basket (Passive, General, GILTI, Branch). FTC limitation, deduction allocation, high-tax kickout toggle, per-country breakdown.

%
$
Total gross income from foreign sources in this basket
$
Foreign taxes eligible for credit (not deduction)
$
Total US + foreign income after all deductions
$
US tax before foreign tax credit (line 9 of Form 1116)
$
Mortgage interest, charitable, other deductions apportioned to foreign source
$
Unused FTC from prior years (same basket, up to 10 years)
$72,000
Net Foreign Taxable Income
$20,400
FTC Limitation
$20,400
Allowed FTC (Credit Used)
$1,600
Excess Credits (Carryforward)

Form 1116 Line-by-Line Summary

Gross Foreign Income (Line 1a)$80,000
Deductions Allocated (Lines 2–7)($8,000)
Net Foreign Source Taxable Income (Line 8)$72,000
Worldwide Taxable Income (Line 9b)$300,000
Foreign/Worldwide Ratio (Line 9c)24.00%
US Tax Before FTC (Line 9)$85,000
FTC Limitation (Line 10) = US Tax Γ— Ratio$20,400
Foreign Taxes Paid (Line 11)$22,000
Prior Year Carryforward$0
Allowed FTC (Line 22)$20,400
Excess Credits β†’ 10-Year Carryforward$1,600
Effective Foreign Tax Rate27.50%

How to Use the Form 1116 FTC Calculator

Select your income basket, enter your gross foreign income, foreign taxes paid, and total worldwide income. The FTC limitation ensures you cannot claim more credit than the US tax attributable to your foreign income.

FTC Limitation Formula

FTC Limit = US Total Tax Γ— (Net Foreign Income Γ· Worldwide Income)

Net Foreign Income = Gross Foreign Income βˆ’ Deductions Allocated. Allowed credit = lesser of FTC Limit or Foreign Taxes Paid. Excess credits carry back 1 year and forward 10 years (except GILTI).

High-Tax Kickout (HTKO)

When effective foreign tax rate exceeds 37% (US top rate), general basket income is reclassified to passive basket. Use the Extended tab to apply HTKO and see its impact.

Extended

Multi-Country Basket Worksheet + Deduction Allocation + HTKO

Full line-by-line Form 1116 worksheet with Sankey-style flow diagram and country/basket table

Add multiple foreign income items by country and basket. The calculator aggregates per basket for total FTC.

$
$
CountryBasketGross IncomeForeign TaxEff. Rate

No items added yet. Add a country above.

Estimate deductions allocable to foreign income using the gross income apportionment method (IRS Reg. Β§1.861-8).

$
$
$
$
Deduction TypeTotalForeign ApportionmentAmount Allocated
Total Deductions Allocatedβ€”β€”

Apportionment ratio = Gross Foreign Income / Worldwide Taxable Income. Use this total as "Deductions Allocated" in the main calculator.

The high-tax kickout election (Reg. Β§1.904-4(c)) reclassifies general basket income to passive when the foreign effective rate exceeds the top US rate (37%).

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$
$
$
$
$
MetricWithout HTKOWith HTKO ElectionDifference

Visual flow of foreign income through baskets to allowed credit vs. excess carryforward.

Frequently Asked Questions

What is the Foreign Tax Credit (FTC) and Form 1116?
The Foreign Tax Credit allows US taxpayers to offset US tax liability with income taxes paid to foreign governments on foreign-source income. Form 1116 is filed to claim this credit. The credit is limited to the lesser of the foreign taxes paid or the US tax attributable to foreign income (the "FTC limitation"). Separate limitation baskets prevent cross-crediting of high-taxed income against low-taxed income.
What are the FTC income baskets and why do they matter?
The IRS requires separate FTC calculations for different income categories: Passive (dividends, interest, royalties), General (wages, active business income), GILTI (Β§951A global intangible low-taxed income), Branch (income of foreign branch operations), and Section 901(j) income from sanctioned countries. Each basket has its own limitation calculation. Excess credits in one basket cannot offset deficits in another, but can be carried back 1 year and forward 10 years within the same basket.
How is the FTC limitation calculated?
FTC Limitation = US Total Tax Γ— (Foreign Source Taxable Income / Worldwide Taxable Income). Foreign source taxable income is gross foreign income minus deductions allocated and apportioned to foreign income (such as mortgage interest, state taxes, and other expenses). The allowed credit is the lesser of actual foreign taxes paid and the FTC limitation. Any excess is carried to other years within the same basket.
What is the high-tax kickout (HTKO) election?
The high-tax kickout election (Reg. Β§1.904-4(c)) moves income from the general basket to the passive basket when the effective foreign tax rate exceeds the highest US marginal rate (37% for 2026). This prevents passive income taxed at very high foreign rates from distorting the general basket limitation. HTKO can sometimes increase or decrease total allowable credits depending on the taxpayer's overall foreign income mix and US tax situation.
What happens to excess FTC credits β€” can they carry forward?
Yes. If the FTC limitation exceeds foreign taxes paid (excess limitation), no immediate benefit is created but you can carry the credit to a year with foreign taxes. If foreign taxes paid exceed the FTC limitation (excess credits), you can carry back 1 year and carry forward 10 years. The carryforward tracks by basket separately. GILTI basket credits have special limitations β€” no carryforward is allowed for GILTI credits that exceed the GILTI limitation amount.

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