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April 1, 2025
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Foreign Tax Credit and refunds

  • April 1, 2025
  • 1 reply
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If one takes a credit for foreign taxes paid on for 1116, and later gets a refund from the foreign government, the credit taken should be reduced and an amended return needs to filed (per IRS instruction for for form 1116)


With no other changes to the return, only change would be the tax liability on 1040x line 6 (increased by the amount of the refund). Is this correct?

 

***  Also, on the current return, if you know what the refund from foreign govt is going to be, can you just reduce the amount of foreign taxes paid on form 116, and thus avoid amending the return next year or later? ****

    Best answer by MAK70

    Yes, the only change you should see is the amount of tax due- since the tax credit reduces the amount you actually paid (and not necessarily the amount of tax).  If you do know you are going to get the refund, you can reduce the amount of the credit now so you do not have to file the amended return.

    1 reply

    MAK70Answer
    April 2, 2025

    Yes, the only change you should see is the amount of tax due- since the tax credit reduces the amount you actually paid (and not necessarily the amount of tax).  If you do know you are going to get the refund, you can reduce the amount of the credit now so you do not have to file the amended return.