Form 1116 - Foreign Tax Credit

Form 1116 is a form used by U.S. taxpayers to claim a credit for taxes paid to foreign countries. The purpose of the Foreign Tax Credit is to avoid double taxation on income earned abroad. Here's a brief paragraph description of its purpose:

Form 1116 serves the critical function of providing U.S. taxpayers relief from the burden of paying taxes to both the United States and foreign governments on the same income. When individuals or businesses earn income in a foreign country and are subject to taxes in that jurisdiction, the Foreign Tax Credit allows them to offset a portion of their U.S. tax liability by the amount of foreign taxes paid. This credit helps prevent the same income from being taxed twice and promotes fairness in the international taxation system. Taxpayers must use Form 1116 to calculate the amount of the credit and report relevant information about their foreign income and taxes paid.