2023 Form 1116 - Foreign Tax Credit

Form 1116 serves the crucial function of facilitating the claiming of the Foreign Tax Credit, a tax relief mechanism designed to prevent the double taxation of income earned abroad. When U.S. taxpayers generate income in foreign countries and are subject to foreign income taxes, the Foreign Tax Credit allows them to offset a portion of their U.S. tax liability with the foreign taxes paid. By completing Form 1116, taxpayers provide the necessary information to the Internal Revenue Service (IRS) to calculate the appropriate credit, ensuring that they are not unfairly taxed on the same income by both the United States and the foreign jurisdiction. This form is an essential tool for individuals and businesses engaged in international activities, promoting fairness and preventing the undue burden of double taxation.