International Tax IssuesAnswered

I couldn't use all my foreign tax credit this year — can I carry it forward?

kofi_9a13new member

May 21, 2026 1,240 views 1 answer

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My foreign tax was higher than the Form 1116 limitation allowed, so part of my credit went unused. Is that lost, or can I carry it to another year? And how long do I have to use it?

ForeignLLCTax OfficialTax Pro

Answered May 21, 2026 · Editorial standards

One year back, ten years forward — by basket

Unused direct-credit foreign taxes are generally not lost. They carry back one year and then forward ten years, applied first to the earliest eligible year and then to the next, and they are tracked separately by basket. The carryforward window does not extend just because you could not use a credit in some intervening year. The big exception is the section 951A (GILTI) basket, where no carryback or carryforward is allowed at all.

Schedule B is the control sheet

When you enter a carryover on line 10 or generate a new carryover in the current year, the instructions tell you to attach Schedule B (Form 1116) for each applicable category. Schedule B reconciles your running, year-by-year, basket-by-basket inventory of unused foreign taxes, which is essential once you have more than one open year.

Watch the deduction-year and de minimis-year traps

You cannot carry a credit back into a year for which you deducted (rather than credited) foreign taxes, and you generally must reduce the carryover by the amount you would have used had you credited in that year. If the blocked year was instead a de minimis no-Form-1116 election year, the carryover simply cannot move to or from it, and you do not reduce the carryover by the hypothetical amount.

Key Takeaways

Unused direct-credit foreign taxes carry back 1 year and forward 10, by basket.
The section 951A (GILTI) basket gets no carryback or carryforward.
Attach Schedule B (Form 1116) whenever you have a carryover in or out.
Deduction years and de minimis election years constrain carryovers differently.

IRS Sources & References

IRS — Instructions for Form 1116 Cornell LII — 26 U.S.C. § 904 (limitation on credit)Guide: Foreign Tax Credit (Form 1116) — Deep Mechanics

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I couldn't use all my foreign tax credit this year — can I carry it forward?

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