Part II—Foreign Taxes Paid or Accrued

Caution: See General Instructions , earlier, for descriptions of foreign taxes that are eligible for the foreign tax credit and for foreign taxes that aren’t eligible for the foreign tax credit.

Generally, you can take a foreign tax credit in the tax year you paid or accrued the foreign taxes, depending on your method of accounting. If you report on the cash basis, you can choose to take the credit for accrued taxes by checking the “Accrued” box in Part II on a timely filed original return. You can’t make this choice on an amended return. Once you choose to do this, you must credit foreign taxes in the year they accrue on all future returns.

Generally, you must enter in Part II the amount of foreign taxes, in both the foreign currency denomination(s) and as converted into U.S. dollars, that relate to the category of income checked above Part I. Taxes are related to the income if the income is included in the foreign tax base on which the tax is imposed. If the foreign tax you paid or accrued relates to more than one category of income, apportion the tax among the categories. The apportionment is based on the ratio of net foreign taxable income in each category to the total net income subject to the foreign tax. See Allocation of Foreign Taxes in Pub. 514 for an example.

Enter in Part II the foreign taxes that were previously suspended under section 909 and that are allowed in 2025 because the related income is taken into account in 2025. Enter “909 taxes” in column (l) instead of the date paid or accrued. Complete the other columns as appropriate.

If you paid or accrued foreign taxes (such as withholding taxes) that were imposed on a distribution to you of earnings

Worksheet for Home Mortgage Interest—Line 4a Keep for Your Records

Note: Before you complete this worksheet, read the instructions for line 4a, earlier.

1. Enter gross foreign source income* of the type shown on Form 1116. Don’t enter income excluded on Form 2555 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Enter gross income from all sources. Don’t enter income excluded on Form 2555 . . . . . . . . 2.

3. Divide line 1 by line 2 and enter the result as a decimal (rounded to at least four places) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

4. Enter deductible home mortgage interest (from line 8e of Schedule A (Form 1040)) . . . . . . . 4.

5. Multiply line 4 by line 3. Enter the result here and on the appropriate Form 1116, line 4a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.

• If you have to report income from more than one country on Form 1116, complete a separate worksheet for each country. Use only the income from that country on line 1 of the worksheet.

18 Instructions for Form 1116 (2025)

that you previously included in gross income under sections 951(a) and 951A(a) (see Foreign Taxes Eligible for a Credit, earlier), enter such taxes (reduced pursuant to sections 965(g) and 960(d)(4), if applicable) in columns (p) and (t) on the Form 1116 for the appropriate separate category. Section 960(d)(4) applies to foreign income taxes paid or accrued with respect to any amount excluded from gross income under section 959(a) by reason of an inclusion in gross income under section 951A(a) after June 28, 2025. Enter only foreign taxes (reduced as applicable) that you paid or accrued; don’t enter any taxes that you were deemed to pay under section 960(b)(1).

Tip: If foreign tax paid on passive income is reported to you in U.S. dollars on a Form 1099-DIV, 1099-INT, or similar statement, you don’t have to convert the amount shown into foreign currency. This rule applies whether or not you can make the election to claim the foreign tax credit without filing Form 1116 (as explained earlier). Enter “1099 taxes” in column (l) of Part II, and complete columns (q) through (u) for each foreign country indicated in Part I.

Note: If you are taking a credit for additional taxes paid or accrued as the result of an audit by a foreign taxing authority or you are filing an amended return reflecting a foreign tax refund, attach a statement to Form 1116 identifying these taxes.