Guide to Global Payroll Management - 2020 - D-142

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Guide to Global Payroll Management

Worksheet for Line 18. You must make
this election if you have any foreign
qualified dividends or foreign capital
gains (or losses) and you chose not to
make any adjustments to those
amounts when you completed lines 1a
and 5. You can't make this election if
you have any foreign qualified dividends
or foreign capital gains (or losses) and
you made adjustments to those
amounts when you completed lines 1a
and 5. In this case, complete the
Worksheet for Line 18. You qualify for
the adjustment exception if:
1. The amount of your foreign
source qualified dividends, plus the
amount of your foreign source net
capital gain, is less than $20,000; and
2. Line 18 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions is less
than or equal to:
a. $321,450 if married filing jointly or
qualifying widow(er),
b. $160,725 if married filing
separately,
c. $160,725 if single, or
d. $160,700 if head of household
(or, for trusts and estates, see section
904(b) and the regulations issued under
that Code section to determine if you
qualify for the adjustment exception).
See special rules if you are subject to
the alternative minimum tax.

Your foreign source net capital

TIP gain is the excess of your

foreign source net long-term
capital gain over your foreign source net
short-term capital loss. Ignore any
foreign source qualified dividends or
capital gains that you elected to include
on Form 4952, line 4g, in determining
the amount of your foreign source
qualified dividends and net capital gain.
If you aren't required to complete the
Worksheet for Line 18 or you qualify for
the adjustment exception and elect not
to adjust your qualified dividends and
capital gains, enter on line 18 of Form
1116 your taxable income without the
deduction for your exemption (for
example, the amount from Form 1040 or
1040-SR, line 11b).
If you do need to complete the
Worksheet for Line 18, do the following.
Line 2. Enter the amount (if any)
from line 42 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions or line 39
of the Schedule D Tax Worksheet in the
Schedule D (Form 1041) instructions.
Instructions for Form 1116 (2019)

D-142

Line 4. Enter the amount (if any)
from line 39 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions or line 36
of the Schedule D Tax Worksheet in the
Schedule D (Form 1041) instructions.
Line 6. Enter the amount (if any)
from line 33 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions or line 30
of the Schedule D Tax Worksheet in the
Schedule D (Form 1041) instructions.
Line 8. Enter the amount (if any)
from line 30 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions or line 26
of the Schedule D Tax Worksheet in the
Schedule D (Form 1041) instructions.
Line 10. Enter the amount (if any)
from line 22 of the Schedule D Tax
Worksheet in the Schedule D (Form
1040 or 1040-SR) instructions or line 19
of the Schedule D Tax Worksheet in the
Schedule D (Form 1041) instructions.
Complete all other lines as instructed
on the worksheet.

Line 20

If you are completing line 20 for
separate category g (lump-sum
distributions), enter the amount from
line 5 of the Worksheet for Lump-Sum
Distributions.
Don't complete line 20 for separate
category e (section 901(j) income),
discussed earlier.
For all other applicable categories,
complete line 20 as follows.

Individuals.
* Form 1040 or 1040-SR filers. Enter
the total of Form 1040 or 1040-SR,
line 12a, and Schedule 2 (Form 1040 or
1040-SR), Part I, line 2, less any tax
included on line 44 from Form 4972.
* Form 1040-NR filers. Enter the total
of lines 42 and 44 from Form 1040-NR,
less any tax included on line 42 from
Form 4972.
Estates and trusts.
* Form 1041 filers. Enter the amount
from Form 1041, Schedule G, line 1a.
* Form 990-T filers. Enter the total of
Form 990-T, lines 41, 42, and 44.
* Form 1040-NR filers. Enter the
amount from line 42 from Form
1040-NR, less any tax included on
line 42 from Form 4972.

Line 22

The maximum foreign tax credit you can
claim in the current year is generally
limited to the allocated amount of U.S.
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tax imposed on the foreign income, or
the actual amount of foreign tax paid or
accrued on the foreign income (after
reductions required on line 12),
whichever is less. However, see Foreign
Taxes Eligible for a Credit, earlier, for
additional information.
If the amount on line 21 is smaller
than the amount on line 14, see
Pub. 514 for more information on
carryback and carryforward provisions,
including examples.

Part IV-Summary of
Credits From Separate
Parts III

Complete lines 23 through 29 in
Part IV only if you must complete more
than one Form 1116 because you have
more than one of the categories of
income listed above Part I.

Complete Part IV on only one Form
1116 (the one with the largest amount
entered on line 22) to summarize the
credits you figured on all of your Forms
1116. However, see Exception below.
Enter the credits from line 22 of all of
your Forms 1116 on lines 23 through 29
of the Form 1116 with the largest
amount entered on line 22 to summarize
your credits. File the other Forms 1116
as attachments.
Exception. If you completed a Form
1116 for category g (lump-sum
distributions) or e (section 901(j)
income), don't use Part IV of that Form
1116 as your summary, unless you are
filing both a Form 1116 for category g
and e but no other category.

Line 31

Enter the smaller of line 20 or line 30.
Note. Generally, line 30 will exceed
line 20 only if you have U.S. capital
gains or qualified dividends that are
subject to the capital gain rate
differential (figured in the Worksheet for
Line 18).
Paperwork Reduction Act Notice.
We ask for the information on this form
to carry out the Internal Revenue laws of
the United States. You are required to
give us the information. We need it to
ensure that you are complying with
these laws and to allow us to figure and
collect the right amount of tax.
You aren't required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records
relating to a form or its instructions must

Guide to Global Payroll Management - 2020

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