Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Foreign Tax Credit and Completing Form 1116

Introduction

Foreign Tax Credit for Puerto Rico Taxpayers

U.S. citizens and residents compute their U.S. taxes based on their worldwide income. This sometimes results in U.S. citizens having to pay tax or accrue foreign taxes to a foreign country on foreign source income and are also subject to U.S. tax on the same income.

The foreign tax credit was created to help taxpayers avoid this double taxation. It allows taxpayers to take a tax credit for taxes paid to a foreign government on foreign source income that is subject to U.S. tax. For Puerto Rico residents, the foreign tax credit reduces a taxpayer's tax liability by some or all of the Puerto Rico taxes paid or accrued during the tax year.

More Information

Refer to the Publication 514 for more information on the foreign tax credit.

World map.