Schedule K-1

Claiming The Foreign Tax Credit With Or Without Filing Form 1116

Form 1116 relates to foreign tax credits, which are intended to affect taxpayers living abroad. These credits benefit foreign taxpayers by reducing the double tax burden that arises when foreign source income is taxed by both the United States and the foreign country where the taxpayers’ income originates.

The foreign tax must meet four tests to qualify for the foreign tax credit:

  1. The tax must be a legal and actual foreign tax liability;
  2. The tax must be imposed on the taxpayer claiming the credit;
  3. The taxpayer must have paid or accrued the tax; and

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