I paid a little foreign tax on dividends — do I have to file Form 1116, or can I skip it?

An individual can claim the foreign tax credit directly on Schedule 3 without filing Form 1116, but only if all three conditions hold: all of your foreign-source gross income is passive category income; all of that income and the related foreign taxes are shown on a qualified payee statement such as a Form 1099 or Schedule K-3; and your total creditable foreign taxes do not exceed $300, or $600 on a joint return. Foreign tax of about $250 on 1099 dividends would generally fit, assuming you have no other foreign income.

If you use the no-Form-1116 election, no foreign-tax carryover can move into or out of that year. Carryovers to and from other years are unaffected, but if you happen to have an old passive-basket carryforward you want to use, electing the simple route can destroy more value than the filing convenience saves. If all you have is the current-year dividend tax and no carryover story, the shortcut is usually fine.

Taking the credit and deducting the same year's foreign taxes are mutually exclusive (with narrow exceptions). For most people the credit is worth more than a deduction. If you ever switch from deduction to credit, you get a favorable 10-year amendment window under section 6511(d)(3); switching the other way generally gets only the ordinary 3-year refund period.