Form 1118 – Foreign Tax Credit for Corporations

Last reviewed: 2025‑10‑26

Use the Form 1118: Form 1118 – Foreign Tax Credit for Corporations Tax Form Calculator Form 1118: Form 1118 – Foreign Tax Credit for Corporations as a stand alone tax form calculator to quickly calculate specific amounts for your 2026 1118 state tax return. Alternatively, you can use one of our Combined Federal and State Tax Estimators to quickly calculate your salary, tax, and take-home pay.

U.S. corporations with foreign operations often face duplicate taxation: first by a foreign jurisdiction, then by the U.S. tax system. Form 1118 provides a mechanism to recognise and offset that burden through the Foreign Tax Credit (FTC). By filing this form, eligible corporations can reduce their U.S. tax liability by the amount of foreign income taxes paid or accrued—so long as the foreign income is also subject to U.S. tax.

When you begin completing Form 1118, make sure you understand these core concepts:

Eligibility: Corporations that elect to claim the foreign tax credit under IRC §901 must attach this form to their U.S. income tax return (typically Form 1120).
Separate limitation categories: The IRS divides foreign‑source income into distinct “baskets” (e.g., general category, passive category, foreign branch, etc.). You must file a separate Form 1118 for each limitation category, and you cannot offset excess credit between categories.
Eligible foreign taxes: Only foreign taxes that are legally imposed, paid or accrued, and not eligible for refund qualify. Taxes must have been paid or accrued in the year claimed.
Credit limitation: Your allowable foreign tax credit is capped by your U.S. tax liability on foreign‑source income for each limitation category. Any unused credit in that category may be carried back one year or forward up to ten years.
Documentation and redetermination: Maintain records of foreign tax payments, income source documentation, and be ready to respond if foreign tax liability or income changes—a “redetermination” may require amended filings.

Foreign Tax Credit—Corporations
Schedule A Income or (Loss) Before Adjustments (Report all amounts in U.S. dollars. See Specific Instructions.)
	1. Foreign Country or U.S. Possession (Enter two-letter code; see instructions. Use a separate line for each.) *	Gross Income or (Loss) From Sources Outside the United States (INCLUDE Foreign Branch Gross Income here and on Schedule F)
		2. Deemed Dividends (see instructions)		3. Other Dividends		4. Interest	5. Gross Rents, Royalties, and License Fees	6. Gross Income From Performance of Services	7. Other (attach schedule)		8. Total (add columns 2(a) through 7)
		(a) Exclude gross-up	(b) Gross-up (sec. 78)	(a) Exclude gross-up	(b) Gross-up (sec. 78)
A
B
C
D
E
F
Totals (add lines A through F)
* For section 863(b) income, NOLs, income from RICs, and high-taxed income, use a single line (see instructions). Deductions (INCLUDE Foreign Branch Deductions here and on Schedule F)											13. Total Income or (Loss) Before Adjustments (subtract column 12 from column 8)
	9. Definitely Allocable Deductions					10. Apportioned Share of Deductions Not Definitely Allocable (enter amount from applicable line of Schedule H, Part II, column (d))	11. Net Operating Loss Deduction		12. Total Deductions (add columns 9(e) through 11)
	Rental, Royalty, and Licensing Expenses		(c) Expenses Related to Gross Income From Performance of Services	(d) Other Definitely Allocable Deductions	(e) Total Definitely Allocable Deductions (add columns 9(a) through 9(d))
	(a) Depreciation, Depletion, and Amortization	(b) Other Expenses
A
B
C
D
E
F
T O T A L S
Schedule B Foreign Tax Credit (Report all foreign tax amounts in U.S. dollars.)
Part I—Foreign Taxes Paid, Accrued, and Deemed Paid (see instructions) /td>
	1. Credit is Claimed for Taxes (check one): Paid Accrued		2. Foreign Taxes Paid or Accrued (attach schedule showing amounts in foreign currency and conversion rate(s) used)								3. Tax Deemed Paid (from Schedule C— Part I, column 12, Part II, column 8(b), and Part III, column 8
			Tax Withheld at Source on:			Other Foreign Taxes Paid or Accrued on:				(h) Total Foreign Taxes Paid or Accrued (add columns 2(a) through 2(g)
	Date Paid	Date Accrued	(a) Dividends	(b) Interest	(c) Rents, Royalties, and License Fees	(d) Section 863(b) Income	(e) Foreign Branch Income	(f) Services Income	(g) Other
A
B
C
D
E
F
Totals (add lines A through F)
Part II—Separate Foreign Tax Credit (Complete a separate Part II for each applicable category of income.)
1a	Total foreign taxes paid or accrued (total from Part I, column 2(h))
b	Foreign taxes paid or accrued by the corporation during prior tax years that were suspended due to the rules of section 909 and for which the related income is taken into account by the corporation during the current tax year (see instructions)
2	Total taxes deemed paid (total from Part I, column 3)
3	Reductions of taxes paid, accrued, or deemed paid (enter total from Schedule G)
4	Taxes reclassified under high-tax kickout
5	Enter the sum of any carryover of foreign taxes (from Schedule K, line 3, column (xiv) and from Schedule I, Part III, line 3) plus any carrybacks to the current tax year
6	Total foreign taxes (combine lines 1a through 5)
7	Enter the amount from the applicable column of Schedule J, Part I, line 11 (see instructions). If Schedule J is not required to be completed, enter the result from the “Totals” line of column 13 of the applicable Schedule A
8a	Total taxable income from all sources (enter taxable income from the corporation’s tax return)
b	Adjustments to line 8a (see instructions)
c	Subtract line 8b from line 8a
9	Divide line 7 by line 8c. Enter the resulting fraction as a decimal (see instructions). If line 7 is greater than line 8c, enter 1
10	Total U.S. income tax against which credit is allowed (regular tax liability (see section 26(b)) minus American Samoa economic development credit)
11	Credit limitation (multiply line 9 by line 10) (see instructions)
12	Separate foreign tax credit (enter the smaller of line 6 or line 11 here and on the appropriate line of Part III)
Part III—Summary of Separate Credits (Enter amounts from Part II, line 12 for each applicable category of income. Do not include taxes paid to sanctioned countries.)
1	Credit for taxes on passive category income
2	Credit for taxes on general category income
3	Credit for taxes on income re-sourced by treaty (combine all such credits on this line)
4	Total (add lines 1 through 3)
5	Reduction in credit for international boycott operations (see instructions)
6	Total foreign tax credit (subtract line 5 from line 4). Enter here and on the appropriate line of the corporation’s tax return
Schedule C Tax Deemed Paid by Domestic Corporation Filing Return Use this schedule to figure the tax deemed paid by the corporation with respect to dividends from a first-tier foreign corporation under section 902(a), and deemed inclusions of earnings from a first- or lower-tier foreign corporation under section 960(a). Report all amounts in U.S. dollars unless otherwise specified.
Part I—Dividends and Deemed Inclusions From Post-1986 Undistributed Earnings
1a. Name of Foreign Corporation (identify DISCs and former DISCs)		1b. EIN (if any) of the foreign corporation	1c. Reference ID number (see instructions)	2. Tax Year End (Yr-Mo) (see instructions)	3. Country of Incorporation (enter country code - see instructions)	4. Post-1986 Undistributed Earnings (in functional currency —attach schedule)	5. Opening Balance in Post-1986 Foreign Income Taxes		6. Foreign Taxes Paid and Deemed Paid for Tax Year Indicated
									(a) Taxes Paid		(b) Taxes Deemed Paid (see instructions)







7. Post-1986 Foreign Income Taxes (add columns 5, 6(a), and 6(b))		8. Dividends and Deemed Inclusions				9. Divide column 8(a) by column 4	10. Multiply column 7 by column 9		11. Section 960(c) Limitation		12. Tax Deemed Paid (subtract column 11 from column 10)
		(a) Functional Currency		(b) U.S. Dollars







Total (Add amounts in column 12. Enter the result here and include on “Totals” line of Schedule B, Part I, column 3.) ▸
Part II—Dividends Paid Out of Pre-1987 Accumulated Profits
1a. Name of Foreign Corporation (identify DISCs and former DISCs)		1b. EIN (if any) of the foreign corporation	1c. Reference ID number (see instructions	2. Tax Year End (Yr-Mo) (see instructions)	3. Country of Incorporation (enter country code - see instructions)	4. Accumulated Profits for Tax Year Indicated (in functional currency computed under section 902) (attach schedule)	5. Foreign Taxes Paid and Deemed Paid on Earnings and Profits (E&P) for Tax Year Indicated (in functional currency) (see instructions)	6. Dividends Paid		7. Divide column 6(a) by column 4	8. Tax Deemed Paid (see instructions)
								(a) Functional Currency	(b) U.S. Dollars		(a) Functional Currency	(b) U.S. Dollars





Total (Add amounts in column 8b. Enter the result here and include on “Totals” line of Schedule B, Part I, column 3.) ▸
Part III—Deemed Inclusions From Pre-1987 Earnings and Profits
1a. Name of Foreign Corporation (identify DISCs and former DISCs)		1b. EIN (if any) of the foreign corporation	1c. Reference ID number (see instructions	2. Tax Year End (Yr-Mo) (see instructions)	3. Country of Incorporation (enter country code - see instructions)	4. E&P for Tax Year Indicated (in functional currency translated from U.S. dollars, computed under section 964) (attach schedule)	5. Foreign Taxes Paid and Deemed Paid for Tax Year Indicated (see instructions)	6. Deemed Inclusions		7. Divide column 6(a) by column 4	8. Tax Deemed Paid (multiply column 5 by column 7)
								(a) Functional Currency	(b) U.S. Dollars





Total (Add amounts in column 8. Enter the result here and include on “Totals” line of Schedule B, Part I, column 3.) ▸
Schedule D Tax Deemed Paid by First- and Second-Tier Foreign Corporations under Section 902(b) Use Part I to compute the tax deemed paid by a first-tier foreign corporation with respect to dividends from a second-tier foreign corporation. Use Part II to compute the tax deemed paid by a second-tier foreign corporation with respect to dividends from a third-tier foreign corporation. Report all amounts in U.S. dollars unless otherwise specified.
Part I—Tax Deemed Paid by First-Tier Foreign Corporations
Section A—Dividends Paid Out of Post-1986 Undistributed Earnings (Include the column 10 results in Schedule C, Part I, column 6(b).)
1a. Name of Second-Tier Foreign Corporation and Its Related First-Tier Foreign Corporation		1b. EIN (if any) of the second-tier foreign corporation	1c. Reference ID number (see instructions)		2. Tax Year End (Yr-Mo) (see instructions)		3. Country of Incorporation (enter country code - see instructions)		4. Post-1986 Undistributed Earnings (in functional currency—attach schedule)		5. Opening Balance in Post-1986 Foreign Income Taxes





6. Foreign Taxes Paid and Deemed Paid for Tax Year Indicated			7. Post-1986 Foreign Income Taxes (add columns 5, 6(a), and 6(b))		8. Dividends Paid (in functional currency)				9. Divide column 8(a) by column 4		10. Tax Deemed Paid (multiply column 7 by column 9)
(a) Taxes Paid		(b) Taxes Deemed Paid (see instruc- tions)			(a) of Second-tier Corporation		(b) of First-tier Corporation





Section B—Dividends Paid Out of Pre-1987 Accumulated Profits (Include the column 8(b) results in Schedule C, Part I, column 6(b).)
1a. Name of Second-Tier Foreign Corporation and Its Related First-Tier Foreign Corporation		1b. EIN (if any) of the second-tier foreign corporation	1c. Reference ID number (see instruc- tions)	2. Tax Year End (Yr-Mo) (see instructions)	3. Country of Incorporation (enter country code - see instructions)	4. Accumula- ted Profits for Tax Year Indicated (in functional currency —attach schedule)	5. Foreign Taxes Paid and Deemed Paid for Tax Year Indicated (in functional currency—see instructions)	6. Dividends Paid (in functional currency)		7. Divide Column 6(a) by Column 4	8. Tax Deemed Paid (see instructions)
								(a) of Second-tier Corpora- tion	(b) of First-tier Corpora- tion		(a) Functional Currency of Second- tier Corpora- tion	(b) U.S. Dollars





Part II—Tax Deemed Paid by Second-Tier Foreign Corporations
Section A—Dividends Paid Out of Post-1986 Undistributed Earnings (In general, include the column 10 results in Section A, column 6(b), of Part I. However, see instructions for Schedule C, Part I, column 6(b) for an exception.)
1a. Name of Third-Tier Foreign Corporation and Its Related Second-Tier Foreign Corporation		1b. EIN (if any) of the thirdtier foreign corporation	1c. Reference ID number (see instructions)		2. Tax Year End (Yr-Mo) (see instructions)		3. Country of Incorporation (enter country code - see instructions)		4. Post-1986 Undistributed Earnings (in functional currency—attach schedule)		5. Opening Balance in Post-1986 Foreign Income Taxes





6. Foreign Taxes Paid and Deemed Paid for Tax Year Indicated			7. Post-1986 Foreign Income Taxes (add columns 5, 6(a), and 6(b))		8. Dividends Paid (in functional currency)				9. Divide column 8(a) by column 4		10. Tax Deemed Paid (multiply column 7 by column 9)
(a) Taxes Paid		(b) Taxes Deemed Paid (from Schedule E, Part I, column 10)			(a) of Third-tier Corporation		(b) of Second-tier Corporation





Section B—Dividends Paid Out of Pre-1987 Accumulated Profits (In general, include the column 8(b) results in Section A, column 6(b), of Part I. However, see instructions for Schedule C, Part I, column 6(b) for an exception.)
1a. Name of Third-Tier Foreign Corporation and Its Related Second-Tier Foreign Corporation		1b. EIN (if any) of the third-tier foreign corporation	1c. Reference ID number (see instructions)	2. Tax Year End (Yr-Mo) (see instructions)	3. Country of Incorporation (enter country code - see instructions)	4. Accumulated Profits for Tax Year Indicated (in functional currency —attach schedule)	5. Foreign Taxes Paid and Deemed Paid for Tax Year Indicated (in functional currency—see instructions)	6. Dividends Paid (in functional currency)		7. Divide column 6(a) by column 4	8. Tax Deemed Paid (see instructions)
								(a) of Third-tier Corpora- tion	(b) of Second-tier Corpora- tion		(a) In Functional Currency of Third-tier Corpora- tion	(b) U.S. Dollars





Schedule E Tax Deemed Paid by Certain Third-, Fourth-, and Fifth-Tier Foreign Corporations Under Section 902(b) Use this schedule to report taxes deemed paid with respect to dividends from eligible post-1986 undistributed earnings of fourth-, fifth- and sixth-tier controlled foreign corporations. Report all amounts in U.S. dollars unless otherwise specified.
Part I—Tax Deemed Paid by Third-Tier Foreign Corporations (In general, include the column 10 results in Schedule D, Part II, Section A, column 6(b). However, see instructions for Schedule C, Part I, column 6(b) for an exception.)
1a. Name of Fourth-Tier Foreign Corporation and Its Related Third-Tier Foreign Corporation		1b. EIN (if any) of the fourth-tier foreign corporation	1c. Reference ID number (see instructions)		2. Tax Year End (Yr-Mo) (see instructions)		3. Country of Incorporation (enter country code- see instructions)		4. Post-1986 Undistributed Earnings (in functional currency—attach schedule)		5. Opening Balance in Post-1986 Foreign Income Taxes





6. Foreign Taxes Paid and Deemed Paid for Tax Year Indicated			7. Post-1986 Foreign Income Taxes (add columns 5, 6(a), and 6(b))		8. Dividends Paid (in functional currency)				9. Divide column 8(a) by column 4		10. Tax Deemed Paid (multiply column 7 by column 9)
(a) Taxes Paid		(b) Taxes Deemed Paid (from Part II, column 10)			(a) of Fourth-tier CFC		(b) of Third-tier CFC





Part II—Tax Deemed Paid by Fourth-Tier Foreign Corporations (In general, include the column 10 results in column 6(b) of Part I. However, see instructions for Schedule C, Part I, column 6(b) for an exception.)
1a. Name of Fifth-Tier Foreign Corporation and Its Related Fourth-Tier Foreign Corporation		1b. EIN (if any) of the fifth-tier foreign corporation	1c. Reference ID number (see instructions)		2. Tax Year End (Yr-Mo) (see instructions)		3. Country of Incorporation (enter country code - see instructions)		4. Post-1986 Undistributed Earnings (in functional currency—attach schedule)		5. Opening Balance in Post-1986 Foreign Income Taxes





6. Foreign Taxes Paid and Deemed Paid for Tax Year Indicated			7. Post-1986 Foreign Income Taxes (add columns 5, 6(a), and 6(b))		8. Dividends Paid (in functional currency)				9. Divide column 8(a) by column 4		10. Tax Deemed Paid (multiply column 7 by column 9)
(a) Taxes Paid		(b) Taxes Deemed Paid (from Part III, column 10)			(a) of Fifth-tier CFC		(b) of Fourth-tier CFC





Part III—Tax Deemed Paid by Fifth-Tier Foreign Corporations (In general, include the column 10 results in column 6(b) of Part II above. However, see instructions for Schedule C, Part I, column 6(b) for an exception.)
1a. Name of Sixth-Tier Foreign Corporation and Its Related Fifth-Tier Foreign Corporation		1b. EIN (if any) of the sixth-tier foreign corporation	1c. Reference ID number (see instructions)		2. Tax Year End (Yr-Mo) (see instructions)		3. Country of Incorporation (enter country code - see instructions)		4. Post-1986 Undistributed Earnings (in functional currency—attach schedule)		5. Opening Balance in Post-1986 Foreign Income Taxes





6. Foreign Taxes Paid for Tax Year Indicated			7. Post-1986 Foreign Income Taxes (add columns 5 and 6)		8. Dividends Paid (in functional currency)				9. Divide column 8(a) by column 4		10. Tax Deemed Paid (multiply column 7 by column 9)
					(a) of Sixth-tier CFC		(b) of Fifth-tier CFC





Schedule F Gross Income and Definitely Allocable Deductions for Foreign Branches							Schedule G Reductions of Taxes Paid, Accrued, or Deemed Paid
							Part I - Reduction Amounts
1. Foreign Country or U.S. Possession (Enter two-letter code from Schedule A, column 1. Use a separate line for each.)			2. Gross Income		3. Definitely Allocable Deductions		A	Reduction of Taxes Under Section 901(e)—Attach separate schedule
A							B	Reduction of Foreign Oil and Gas Taxes—Enter amount from Schedule I, Part II, line 4
B							C	Reduction of Taxes Due to International Boycott Provisions— Enter appropriate portion of Schedule C (Form 5713), line 2b. Important: Enter only “specifically attributable taxes” here.
C							D	Reduction of Taxes for Section 6038(c) Penalty— Attach separate schedule
D							E	Taxes suspended under section 909
E							F	Other Reductions of Taxes—Attach schedule(s)
F							Total (add lines A through F). Enter here and on Schedule B, Part II, line 3 ▸
Totals (add lines A through F)* ▸							Part II - Other Information
							Check this box if, during the tax year, the corporation paid or accrued any foreign tax that was disqualified for credit under section 901(m)
Schedule H Apportionment of Deductions Not Definitely Allocable (complete only once)
Part I—Research and Development Deductions
		(a) Sales Method				(b) Gross Income Method — Check method used: Option 1 Option 2
		Product line #1 (SIC Code: )*		Product line #1 (SIC Code: )*		Product line #1 (SIC Code: )*		Product line #1 (SIC Code: )*
		(i) Gross Sales	(ii) R&D Deductions	(iii) Gross Sales	(iv) R&D Deductions	(v) Gross Income	(vi) R&D Deductions	(vii) Gross Income	(viii) R&D Deductions
1	Totals (see instructions)
2	Total to be apportioned
3	Apportion- ment among statutory groupings:
a	General category income
b	Passive category income
c	Section 901(j) income*
d	Income re-sourced by treaty*
4	Total foreign (add lines 3a through 3d)
Part II—Interest Deductions, All Other Deductions, and Total Deductions
					(a) Average Value of Assets—Check method used: Fair market value Tax book value Alternative tax book value		(b) Interest Deductions		(c) All Other Deductions Not Definitely Allocable		(d) Totals (add the corresponding amounts from column (c), Part I; columns (b)(iii) and (b)(iv), Part II; and column (c), Part II). Enter each amount from lines 3a through 3d below in column 10 of the corresponding Schedule A.
					(i) Nonfinancial Corpora- tions	(ii) Financial Corpora- tions	(iii) Nonfinancial Corpora- tions	(iv) Financial Corpora- tions
1a	Totals (see instructions)
b	Amounts specifically allocable under Temp. Regs. 1.861-10T(e)
c	Other specific allocations under Temp. Regs. 1.861-10T
d	Assets excluded from apportionment formula
2	Total to be apportioned (subtract the sum of lines 1b, 1c, and 1d from line 1a)
3	Apportionment among statutory groupings:
a	General category income
b	Passive category income
c	Section 901(j) income*
d	Income re-sourced by treaty*
4	Total foreign (add lines 3a through 3d)

As you fill out Form 1118, you will aggregate foreign‑source income, allocate and apportion deductions (such as allocable interest or R&D), compute the limitation fraction, and determine the creditable foreign taxes. The steps include:

Summing foreign‑source gross income for the category.
Subtracting deductions and allocating expenses properly.
Computing the limitation fraction (foreign‑source taxable income divided by worldwide taxable income) and applying it to your U.S. tax before determining the credit.
Applying unused foreign tax credits via carryback or carryforward rules.

Because global operations often span multiple jurisdictions and tax treaties, Form 1118 also provides insight into your corporate tax exposure, foreign tax carryforward positions, and the impact of treaty benefits or limitations on your foreign tax burden.

Last reviewed: 2025‑10‑26: If you believe this form requires an update, please contact us.

Effective tax planning means treating Form 1118 not just as a compliance obligation, but as an integral component of your international tax strategy. Consider the following best practices:

Ensure your tax team or software is tracking foreign income and taxes in each limitation category year‑by‑year. Mixing categories or losing category detail erodes credit usability.
Monitor treaties and foreign jurisdiction changes — reduced foreign tax rates impact credit eligibility and planning opportunities.
Coordinate with global accounting/finance teams to align foreign tax accruals and payments with the corporate U.S. return timeline to maximise credit realisation.
Retain robust documentation: foreign tax returns, statements of withholding, currency conversions, and treaty benefit forms (e.g., claiming reduced rates) support your claim on audit.

For corporations operating across borders, Form 1118 is a key lever for reducing effective tax rate, preserving foreign tax credit carryforwards, and enhancing transparency for stakeholders. Always begin your foreign tax credit calculation early in the tax year to identify planning opportunities, rather than leaving credit claims to last‑minute filing. Use our dedicated calculator tool to streamline inputs and reduce audit risks.

Frequently Asked Questions

Can I estimate the General Business Credit?

Start with Form 3800 and then reflect the credit here.

How much would a 401(k) contribution change my net?

Model it with the 401(k) Calculator then rerun this page with your pre-tax amount.

Considering an IRS Offer in Compromise?

Read through Form 656-B to understand eligibility and steps.

What does FICA include?

FICA includes Social Security and Medicare payroll taxes withheld from employee wages.

Is there a quick pay-frequency comparison?

Yes—switch frequency on this page; for employer filings see 941 vs 944.

Important Notes

All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.