Form 1116 line 18, your worldwide taxable income.

Who enters what on line 18

Where line 18 sits on Form 1116

Form 1116 is built in parts. Part I reports the foreign income you received and the deductions that go with it, ending with the taxable income on line 7. Part II reports the foreign taxes paid or accrued. Part III, “Figuring the Credit,” is where line 18 sits. Line 17 is your net foreign source taxable income, and line 19 on the printed form says “Divide line 17 by line 18. If line 17 is more than line 18, enter 1.” So line 17 is the numerator and line 18, your taxable income from everywhere, is the denominator. If line 17 is zero or less, you skip line 18 and enter -0- on line 19.

Line 20 then takes your U.S. tax, and line 21 multiplies line 20 by line 19 to give the maximum amount of credit. The fraction caps the credit at the share of your U.S. tax that is attributable to foreign income, so a larger line 18 makes the fraction smaller, and an error on line 18 in either direction changes the limit.

The entry for individuals

The instructions tell individuals to take Form 1040, 1040-SR, or 1040-NR line 11b, subtract line 14 of the same form, and then add Schedule 1-A (Form 1040) line 37. The result goes on line 18. The Form 1116 instructions simply tell you to include the Schedule 1-A line. Read the labels on your own 1040 for those lines rather than relying on the numbers alone, since the IRS can renumber lines from year to year.

Estates and trusts use a different entry: taxable income without the deduction for the exemption. For every filer, if the result is zero or less, the instructions say to enter -0- on line 18 and on line 19.

When you must adjust for qualified dividends and capital gains

If you have qualified dividends or capital gains, you may need to adjust them before they feed into line 18. The test for individuals who completed the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 instructions has two parts that must both be true: line 5 of that worksheet is greater than zero, and line 23 is less than line 24. When both are true you use the Worksheet for Line 18 in the Form 1116 instructions, copying in line 20, line 17, and line 9 of the Form 1040 worksheet as the table above shows, and completing the remaining lines as the worksheet directs. Estates and trusts that completed the Qualified Dividends Tax Worksheet in the Form 1041 instructions, or Part V of Schedule D (Form 1041), have their own version of the same test.

The adjustment exception

You can elect not to adjust if you meet both requirements: line 5 of the Qualified Dividends and Capital Gain Tax Worksheet does not exceed $394,600 (married filing jointly or qualifying surviving spouse) or $197,300 (married filing separately, single, or head of household), and your foreign source net capital gain plus foreign source qualified dividends is under $20,000. The tip in the instructions defines foreign source net capital gain as the excess of foreign source net long-term capital gain over foreign source net short-term capital loss.

You make the election by not completing the Worksheet for Line 18. Two consistency rules apply. You must make the election if you have foreign qualified dividends or foreign capital gains (or losses) and you chose not to adjust them when completing lines 1a and 5. You cannot make it if you did adjust them there, and in that case you must complete the Worksheet for Line 18. If you are not required to complete the worksheet, or you elect out, you simply enter your taxable income as described under Line 18.

Made-up example for the plain case

Made-up figures. Suppose a single filer has no qualified dividends or capital gains that trigger the worksheet, Form 1040 line 11b is $100,000, line 14 is $30,000, and Schedule 1-A line 37 is $0. Line 18 is ($100,000 − $30,000) + $0 = $70,000. If instead line 14 were larger than line 11b, the result would be negative, so the instructions have you enter -0- on lines 18 and 19. This example only shows the arithmetic; it is not an IRS example, and the IRS does not give a dollar example for this line.

More line pages in this set

Related lines: Form 1116 Lines 15 and 16, Form 1116 Line 12, Form 1116 Line 1a.

Sources

• Instructions for Form 1116 (2025): the line-by-line instructions on this page. Read November 2, 2026.
• Form 1116 (2025), Foreign Tax Credit (Individual, Estate, or Trust): the printed line wording and arithmetic on the form. Read November 2, 2026.

Instructions for Form 1116, 2025 edition. The line labels were read from the Form 1116 (2025) PDF the IRS had posted on the date read. Line numbers can shift between years, so check them against the form for your tax year. Examples marked made-up use invented figures; the others reproduce the IRS's own examples.