Form 1118: The Foreign Tax Credit for Corporations
Published November 7, 2026
Form 1118 computes a corporation's foreign tax credit. The credit covers certain taxes paid or accrued to foreign countries or U.S. territories. It reduces U.S. tax on income that was also taxed abroad. Individuals use Form 1116 for a similar credit. This post covers the corporate form only.
The Instructions for Form 1118 (Rev. December 2025) explain the rules. They say to use them with specific revisions of the form and of its schedules, so check the revision date of each schedule. This post is general information. It does not tell you how to file your own return.
Who must file
A corporation that elects the foreign tax credit under section 901 must complete and attach Form 1118 to its income tax return. A corporation that does not elect the credit still must attach Schedule A and Schedule J if it has additions to, reductions of, or recapture of certain overall foreign loss, overall domestic loss, or separate limitation loss accounts.
A corporation that has a foreign tax redetermination under section 905(c) must attach Schedule L for that year. This applies even if the change does not affect its U.S. tax. An individual who makes the section 962 election to be taxed at corporate rates on controlled foreign corporation income also attaches Form 1118.
Individuals with section 962 elections
An individual who elects corporate rates under section 962 also completes Form 1118. The election lets the individual claim a credit based on the foreign income taxes paid by a controlled foreign corporation. The instructions refer to sections 960 and 962 and to Publication 514 for how to complete the form in that case.
When the election can be made or changed
The election to claim the credit for a tax year can be made or changed at any time before the end of a special 10-year period. That period is described in section 6511(d)(3). The election to take a deduction instead of a credit has its own timing rule in the instructions.
Separate categories
The credit is computed separately for each category of income, using a separate limit for each category. Each category has its own limit, so an excess in one category does not offset the limit in another. Foreign taxes must be matched to the right category. The instructions give worksheets and examples for the schedules.
Excess foreign taxes
When allowable foreign income taxes in a category are more than the limit for that category, the excess is carried over. It is first carried back 1 year, to offset taxes in the same category. Any excess left over is carried forward 10 years, again in the same category. The earliest year is used first.
A corporation cannot carry a credit into a year in which it claimed a deduction for foreign taxes. The carryover is also reduced by the amount the corporation would have used if it had chosen a credit. These carryover rules do not apply to some section 951A category income.
Related posts
For the individual version of this credit, see Foreign Tax Credit and Form 1116: The Basics. For the corporate return that the form attaches to, see Form 1120: The Corporate Income Tax Return and Who Must File It.
Checklist
- Confirm whether the corporation is electing the credit, or whether Schedule A or J applies anyway.
- Match each foreign tax to the right income category.
- Track any excess foreign taxes for the 1-year carryback and 10-year carryforward.
- Check the revision date of Form 1118 and each schedule.
- Attach Form 1118 to the corporation's income tax return.
This is general information only. It is not tax advice for your situation.
Sources: Sources: IRS, Instructions for Form 1118 (Rev. December 2025) (https://www.irs.gov/pub/irs-prior/i1118--2025.pdf) This is general information, not advice about your specific return.
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