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International Course > Foreign Tax Credit

Foreign Tax Credit

This lesson covers assisting taxpayers who may be eligible for the foreign tax credit. This credit applies to taxpayers who have paid (or accrued) taxes to a foreign country on foreign-sourced income and are subject to U.S. tax on the same income.

Click the Skills Workout button to learn more about the foreign tax credit.

Skill Check

Check your understanding of rules regarding the foreign tax credit. Indicate whether each of the statements below is true or false by clicking on the correct answer. To check your answers, click the Check My Answers button at the bottom of the page.

  1. To claim the foreign tax credit without filing Form 1116, a taxpayer who is filing Single must have paid foreign taxes as shown on Form 1099-DIV, Form 1099-INT, or Schedule K-1 that are less than or equal to $600.
  • A.
  • B.
  1. Carl is a U.S. citizen living in South Vietnam. His income included wages from his U.S. employer, interest income from a U.S. bank, and interest from a Vietnamese bank. Although he had to pay taxes to South Vietnam on all his income, the only income he can apply to a foreign tax credit is the interest income from the Vietnamese bank.
  • A.
  • B.
  1. Three examples of foreign taxes that generally qualify for the foreign tax credit are taxes on dividends, royalties, and annuities.
  • A.
  • B.