About the Foreign Tax Credit Calculator
This foreign tax credit calculator estimates how much of the income tax you paid to other countries you can claim as a dollar-for-dollar credit against US tax. The credit is capped by the foreign tax credit limitation on Form 1116: you can only offset the share of your US tax that relates to foreign-source income, and the cap is figured separately for each category (basket) of income — mainly passive category income (dividends, interest, royalties) and general category income (wages and business income).
Enter your worldwide taxable income, the foreign-source taxable income and foreign tax paid in each category, and either your US tax before credits or let the calculator estimate it with the 2026 brackets. It shows each basket’s limit, the credit allowed, and the excess foreign tax you can carry back one year or forward ten years.
It is useful for expats in high-tax countries, investors holding international funds and anyone with foreign wages. It also flags when you can skip Form 1116 under the de minimis election ($300 of passive foreign tax, $600 if married filing jointly). The estimate assumes foreign-source income is already net of allocated deductions and does not apply the qualified dividend and capital gain rate adjustments, so treat the result as a planning figure.
With the default inputs, the foreign tax credit allowed is $11,449.00. Change any value above to recalculate instantly.
How to use the foreign tax credit calculator
- 1Enter your filing status and worldwide taxable income.
- 2Enter your US tax before credits, or leave 0 to estimate it.
- 3Enter foreign-source general income (wages, business) and the foreign tax on it.
- 4Enter foreign-source passive income (dividends, interest) and the foreign tax on it.
- 5Review the limit per category, the credit allowed and any carryover.
Formula and method
Form 1116 limits the credit so that foreign taxes can only offset US tax on foreign-source income. For each separate category, the limit is your total US tax before credits multiplied by the ratio of foreign-source taxable income in that category to worldwide taxable income (the ratio can’t exceed 1). The credit for the category is the lesser of the qualified foreign taxes paid or accrued and that limit.
Foreign tax above the limit is not lost: it carries back one year and then forward up to ten years, but only within the same category. Taxpayers whose only foreign taxes are passive taxes of $300 or less ($600 married filing jointly), reported on payee statements, may elect to claim them without Form 1116 and without the limitation. When US tax is not entered, it is estimated from the 2026 ordinary brackets.
- US tax
- US income tax before credits (Form 1040 line 16)
- Foreign-source taxable income
- Foreign gross income in the category minus allocated deductions
- Worldwide taxable income
- Total taxable income from all sources
Worked examples
Foreign wages taxed at 25% plus fund dividends
US tax on $120,000 of taxable income (single, 2026) is $21,398. Foreign wages are 50% of worldwide income, so the general limit is $10,699 — less than the $15,000 paid, leaving $4,301 to carry over. Passive income is 4.17% of the total, a $891.58 limit, so all $750 of dividend tax is creditable. The total credit is $11,449.
Low-tax country: full credit
With $15,000 of US tax and 80% of income from abroad, the general limit is $12,000. Only $8,000 of foreign tax was paid, so the full $8,000 is credited and $7,000 of US tax remains.
Small dividend withholding — de minimis election
A married couple’s only foreign tax is $450 withheld on international fund dividends. That is under the $600 joint threshold, so they can claim the full $450 directly on Schedule 3 without Form 1116.
Frequently asked questions
How is the foreign tax credit limit calculated?+
The limit equals your US tax before credits times foreign-source taxable income divided by worldwide taxable income, computed separately for each category of income on Form 1116. You can’t credit more than the US tax attributable to that foreign income.
Do I need Form 1116 for the foreign tax credit?+
Not if all your foreign taxes are on passive income reported on a 1099 or similar statement and total $300 or less ($600 married filing jointly). Then you can claim them directly on Schedule 3, but you give up any carryover of excess taxes.
What happens to foreign tax above the limit?+
Excess foreign tax can be carried back to the previous tax year and then forward for up to ten years, but only to offset tax in the same category of income and only to the extent those years have unused limitation.
Is a credit or a deduction better for foreign taxes?+
The credit is almost always better because it reduces tax dollar for dollar, while an itemized deduction only saves your marginal rate. You must choose one method for all foreign taxes paid in a year.
Can I claim the foreign tax credit and the foreign earned income exclusion?+
Yes, but not on the same income. Foreign taxes on income you exclude with the FEIE are not creditable, though you can claim a credit for tax on wages above the exclusion or on other foreign income.
What are passive and general category income?+
Passive category income is mostly investment income — dividends, interest, rents and royalties not earned in an active business. General category income covers wages, salaries and active business income. Each has its own limit.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.