Nomadic.Tax
JURISDICTION/US AUTHORITY/IRS TAX YEAR/2025 CLUSTER/US

Foreign Tax Credit Filing — Form 1116

Form 1116 is used to claim the Foreign Tax Credit (FTC) — one of the most powerful tools for US expats in high-tax countries like the UK, Germany, France, and Australia. Unlike the FEIE, the FTC provides a dollar-for-dollar offset against your US tax liability for foreign income taxes paid to a foreign government. For many expats, the FTC eliminates US tax entirely. Filing it correctly — with correct income baskets, carryovers, and allocation — is essential.

Start your return
APPLICABILITY/WHO THIS IS FOR

Who this is for

✓ US citizens or green card holders living in countries with income tax rates higher than the US
✓ Americans paying UK, German, French, Australian, or other high-rate income taxes
✓ Expats with investment income, dividends, or royalties taxed abroad
✓ Those who have chosen FTC over FEIE for their primary tax strategy
✓ Expats with unused foreign tax credit carryovers from prior years
FILING RECORD/FORMS THAT MAY APPLY

What this filing may involve

Every situation is different. The forms below commonly apply — your specific filing may vary.

Form 1116 — Foreign Tax Credit (separate calculation for each income category/basket)
Form 1040 — incorporating the FTC against US tax liability
Form 1116 — AMT — if subject to Alternative Minimum Tax
Form 1116 — carryover calculation — unused credits from prior years are tracked and carried forward
DOCUMENTS/INFORMATION REQUIRED

Documents usually needed

■ Annual tax summary or assessment from foreign tax authority
■ Proof of foreign taxes paid (tax receipts, assessments, or employer annual statement)
■ Income records by category — earned income, passive income, general category
■ Prior year Form 1116 (to carry forward unused credits)
PROCESS/RETURN ASSEMBLY

How Nomadic.Tax works

AI-assisted preparation with licensed professional review — every time.

1
INFORMATION
We categorise your foreign income into the correct FTC baskets (general, passive, etc.)
2
DOCUMENTS
Foreign taxes paid are allocated to each income category and applied against US liability
3
AI PREPARATION
Prior year carryovers are applied where available to reduce current year liability
4
PROFESSIONAL REVIEW / E-FILE
A licensed CPA reviews the Form 1116 calculation before filing your complete return
PROFESSIONAL REVIEW/CPA / ACCOUNTANT SIGN-OFF

When human review matters

ⓘ The FTC is generally better than FEIE in high-tax countries — but the wrong election can cost thousands
ⓘ GILTI (from controlled foreign corporations) has a separate FTC calculation with an 80% limitation
ⓘ Foreign tax credit carryovers can be used for up to 10 years — they're valuable and must be tracked carefully
Authority Guide

Independent research and educational guidance from the Nomadic Tax Institute.

Foreign Tax Credit Guide — Form 1116 →

Relevant plans

Choose the package that best fits your situation, or view all plans.

Premier
$349
For self-employed nomads, freelancers and platform earners.
  • ✓Everything in Standard
  • ✓Schedule C & SE for self-employment
  • ✓Multiple income sources and currencies
Start your return
Most popular

Expat
$499
For Americans living abroad — FEIE, foreign tax credits and FBAR included.
  • ✓Everything in Premier
  • ✓Foreign Earned Income Exclusion (Form 2555)
  • ✓Foreign Tax Credit (Form 1116)
  • ✓FBAR filing (FinCEN 114) included
Start your return
Investor
$599
For expat investors and landlords with income on top of work or business.
  • ✓Everything in Expat
  • ✓Schedules D & E for investments and rentals
  • ✓Foreign asset reporting (Form 8938)
  • ✓FBAR filing (FinCEN 114) included
Start your return
REFERENCE/COMMON QUESTIONS

Frequently asked questions about Foreign Tax Credit Filing — Form 1116

What income categories does the FTC cover?

Form 1116 requires separate calculations for different income categories: general category (employment income), passive category (dividends, interest, rents), Section 951A (GILTI), and foreign branch income. You may need multiple copies of Form 1116 if you have income in multiple categories.

Can I use both FEIE and FTC?

Yes, with restrictions. You cannot claim FTC on the same income excluded via FEIE. However, if your income exceeds the FEIE limit, you can apply FTC to the excess. You can also use FTC on passive income such as dividends that FEIE doesn't cover.

What if I paid more foreign tax than my US liability?

Excess credits can be carried back one year and forward for up to 10 years. These carryovers are tracked and applied in future years to reduce US tax. Our system maintains carryover calculations across filing years.

Who is this for?

Browse by your situation for tailored guidance and the right package.

US Expats in the UK Americans in the UK where the Foreign Tax Credit typically beats FEIE. See who this is for → US Expats in Europe Expats in high-tax European countries using Form 1116 to offset US tax. See who this is for →

Related filing services

US Expat Tax Filing → View filing service FEIE Tax Filing — Form 2555 → View filing service US Filing for Americans in the UK → View filing service See All Pricing & Plans → View pricing & packages

Ready to get your Foreign Tax Credit filing handled?

AI-assisted preparation, reviewed and e-filed by licensed professionals. Fixed price, no surprises.

Start your filing today