What are the Form 1116 'baskets', and why might I have to file more than one?

Section 901 allows the credit only subject to the section 904 limitation, and Form 1116 applies that limitation separately for each category of income. The core post-TCJA baskets for an individual are passive category, general category, foreign branch category, and section 951A category (often called GILTI). There are also narrower specified separate categories, principally section 901(j) sanctioned-country income and treaty re-sourced income. If your income falls into two baskets, you generally file two Forms 1116.

Foreign dividends are passive category income. Foreign consulting (service) income is generally general category, because the catch-all general basket holds active and service income that is not passive, foreign branch, or section 951A — unless the services are attributable to a foreign branch (a foreign QBU), in which case they fall into the foreign branch basket. So your dividends and your consulting income would typically sit in two different baskets and two different Forms 1116.

The limitation and any leftover (carryover) foreign taxes are computed per basket, and they do not cross over. Surplus limitation in your general basket does nothing for unused tax stuck in your passive basket. That separation is also why the high-tax kickout and the foreign branch rules can change which basket your carryovers live in — and that can be valuable or costly depending on your future foreign income. One note for basket purposes: GILTI and the section 951A category are the same basket, not two.