Form 1116 (Schedule B)

What Is Schedule B Form 1116?

Schedule B in form 1116 is specifically designed for taxpayers who need to calculate a separate foreign tax credit limitation for specific categories of income. This becomes necessary in situations where a taxpayer has multiple types of income from foreign sources, such as passive income or general category income. By completing Schedule B, you can accurately determine the limitation for each income category, ensuring that you take the correct amount of foreign tax credit.

Who needs to file form 1116 Schedule B?

Generally speaking, taxpayers with foreign income must file Form 1116 to claim a tax credit for taxes paid to foreign governments. However, Schedule B needs to be filled out by those who have more than one type of foreign income and who must calculate the foreign tax credit limitation separately for each type. If your foreign income is comprised of different baskets – like specific types of dividends or interest – you might need to give special attention to Schedule B.

How to Fill Out the IRS Form 1116 Schedule B

Filling out tax forms correctly is crucial to both comply with tax laws and to take full advantage of potential tax benefits. You'll need to input the separate gross incomes, deductions, and losses for each category. Here are the main steps involved:

1. Tax Year: Specify the tax year for which the form is being filled out. This should be the calendar year or the tax year.
2. Name and Identifying Number: Fill in your name and the identifying number as shown on page 1 of your tax return.
3. Categories of Income: Use a separate Schedule B (Form 1116) for each applicable category of income listed on the form. Check only one box on each schedule. Check the box for the same separate category code as that shown on Form 1116 to which this Schedule B is attached.
4. Foreign Tax Carryover Reconciliation: Fill in the required columns for each category of income. The columns represent:
   • 10th Preceding Tax Year
   • 9th Preceding Tax Year
   • 8th Preceding Tax Year
   • 7th Preceding Tax Year
   • 6th Preceding Tax Year
   • 5th Preceding Tax Year
5. For each category of income, calculate the foreign tax carryover from the prior tax year (enter amounts from the appropriate columns of line 8 of the prior year Schedule B) and adjustments to line 1 (enter description—see instructions)
6. Subtotal: Add the amounts from columns (i) through (vi) to calculate the subtotal
7. Foreign Tax Carryover to the Following Tax Year: Combine lines 3 through 7 to calculate the foreign tax carryover to the following tax year
8. Totals: Add the amounts from columns (viii) through (xiii) to calculate the totals.

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