Foreign Tax Credit

If you are a shareholder in a controlled foreign corporation and made a section 962 election, see the instructions for Forms 1040 and 1040-SR, line 16, for the foreign tax credit you figured on Form 1118.

If you paid income tax to a foreign country or U.S. territory, you may be able to take this credit. Generally, you must complete and attach Form 1116 to do so.

Exception.

You don’t have to complete Form 1116 to take this credit if all of the following apply.

All of your foreign source gross income was from interest and dividends and all of that income and the foreign tax paid on it were reported to you on Form 1099-INT, Form 1099-DIV, or Schedule K-3 (or substitute statement).

The total of your foreign taxes wasn't more than $300 (not more than $600 if married filing jointly).

You held the stock or bonds on which the dividends or interest were paid for at least 16 days and weren’t obligated to pay these amounts to someone else.

You aren’t filing Form 4563 or excluding income from sources within Puerto Rico.

All of your foreign taxes were: Legally owed and not eligible for a refund or reduced tax rate under a tax treaty, and Paid to countries that are recognized by the United States and don’t support terrorism.

For more details on these requirements, see the Instructions for Form 1116.

Do you meet all five requirements just listed?

□ Yes.

Enter on line 1 the smaller of (a) your total foreign taxes, or (b) the total of the amounts on Form 1040 or 1040-SR, line 16, and Schedule 2, line 1a.

□ No.

See Form 1116 to find out if you can take the credit and, if you can, if you have to file Form 1116.