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Publication 514
Foreign Tax Credit for Individuals
Introduction, Useful Items and Important Changes
For use in Preparing 2008 Returns

Choosing To Take Credit or Deduction

Choice Applies to All Qualified Foreign Taxes
Making or Changing Your Choice

Why Choose the Credit?

Credit for Taxes Paid or Accrued
Foreign Currency and Exchange Rates
Foreign Tax Redetermination

Who Can Take the Credit?

U.S. Citizens
Resident Aliens
Nonresident Aliens

What Foreign Taxes Qualify for the Credit?

Tax Must Be Imposed on You
You Must Have Paid or Accrued the Tax
Tax Must Be the Legal and Actual Foreign Tax Liability
Tax Must Be an Income Tax (or Tax in Lieu of Income Tax)

Foreign Taxes for Which You Cannot Take a Credit

Taxes on Excluded Income
Taxes for Which You Can Only Take an Itemized Deduction
Taxes on Foreign Oil Related Income
Taxes on Foreign Mineral Income
Taxes From International Boycott Operations
Taxes on Foreign Oil and Gas Extraction Income
Taxes of U.S. Persons Controlling Foreign Corporations and Partnerships

How To Figure the Credit

Limit on the Credit
Separate Limit Income
Allocation of Foreign Taxes
Foreign Taxes From a Partnership or an S Corporation
Figuring the Limit
Qualified Dividends
Capital Gains and Losses
Allocation of Foreign and U.S. Losses
Tax Treaties

Carryback and Carryover

Time Limit on Tax Assessment
Claim for Refund
Taxes All Credited or All Deducted
Married Couples

How To Claim the Credit

Form 1116
Records To Keep

Simple Example — Filled-In Form 1116

Part I—Taxable Income or Loss From Sources Outside the United States (for Category Checked Above)
Part II—Foreign Taxes Paid or Accrued
Part III—Figuring the Credit
Part IV—Summary of Credits From Separate Parts III

Comprehensive Example — Filled-In Form 1116

Forms 1116
Computation of Taxable Income
Part I—Taxable Income or Loss From Sources Outside the United States (for Category Checked Above)
Part II—Foreign Taxes Paid or Accrued
Part III—Figuring the Credit
Part IV—Summary of Credits From Separate Parts III
Unused Foreign Taxes

How To Get Tax Help