Updated October 18, 2026. Quick answer: Lines 15 to 19 build the fraction that limits the credit. Line 15 carries line 7 over, line 16 adjusts it, line 17 is the net foreign source taxable income, line 18 is your taxable income from the return, and line 19 divides line 17 by line 18. Lines 15, 16, 18 and 19 have instruction paragraphs; line 17 is a caption only.
More IRS forms and schedules, read line by line: Form 2350 extension for filers abroad.
Line 15: taxable income from outside the United States
The caption is “Enter the amount from line 7. This is your taxable income or (loss) from sources outside the United States (before adjustments)”. Line 7 is the result of Part I, covered on the lines 6 and 7 page. The instructions add “If the amount on line 15 is zero or a loss, you generally have no foreign tax credit for the category of income checked above Part I of this Form 1116.” They also say “However, you must complete line 16 and continue with the form even if line 15 is zero or a loss.”
Line 16: the adjustments
The instructions say “You are required to increase or decrease the amount on line 15 by the following adjustments.” On order and statements: “The adjustments must be made in the order listed.” and “If you have more than one adjustment, enter the net adjustment on line 16 and attach a detailed statement showing your computation.”
The instructions list six adjustments by name: “Adjustment for disallowed business loss under section 461(l).” “Allocation of foreign losses.” “Allocation of U.S. losses.” “Recapture of prior-year overall foreign loss accounts.” “Recapture of separate limitation loss accounts.” and “Recapture of overall domestic loss accounts.” Each has its own paragraph in the instructions and they refer to Pub. 514 for more detail. Work through the paragraph for any that applies to you rather than relying on this summary.
The instructions include a worked case for allocating a foreign loss: “Include the $1,600 (in parentheses) on line 16 of the passive category income Form 1116.” It then says “Assuming you have no other line 16 adjustments, enter $2,400” on line 17 of that form.
Line 17: net foreign source taxable income
The caption is “Combine the amounts on lines 15 and 16. This is your net foreign source taxable income.” It adds “(If the result is zero or less, skip line 18 and enter” zero on line 19. The instructions have no separate paragraph for line 17.
A computed illustration, not an IRS example: if line 15 is $6,000 and line 16 is a $500 reduction, line 17 is $6,000 less $500 and that is $5,500.
Line 18: taxable income from your return
For individuals the instructions say “Individuals: Enter on line 18 the sum of (i) Form 1040, 1040-SR, or 1040-NR, line 11b, minus Form 1040, 1040-SR, or 1040-NR, line 14; and (ii) Schedule 1-A (Form 1040), line 37.” For estates and trusts “Estates and trusts: Enter your taxable income without the deduction for your exemption.” If you have qualified dividends or capital gains, the instructions say “you may be required to make adjustments to those qualified dividends and gains before you take those amounts into account on line 18”. The form’s own caution points the same way: “Caution: If you figured your tax using the lower rates on qualified dividends or capital gains, see instructions.” The instructions use the Worksheet for Line 18 for that; use it from the instructions, not from this page. The tax worksheet it refers to is explained on the Qualified Dividends and Capital Gain Tax Worksheet page.
Line 19: the fraction
The form says “Divide line 17 by line 18.” The instructions add “If line 18 is zero, enter” zero, and “If line 18 is greater than zero and line 17 is more than line 18, enter” 1.
A computed illustration, not an IRS example: if line 17 is $5,500 and line 18 is $55,000 then line 19 is $5,500 divided by $55,000 and that is 0.1.
Where the number comes from
Line 15 comes from line 7. Line 16 comes from the adjustments in the instructions and your prior-year loss and recapture records. Line 17 is arithmetic. Line 18 comes from your Form 1040 and Schedule 1-A, adjusted by the worksheet if it applies. Line 19 is arithmetic on lines 17 and 18.
Where it goes next
Line 19 is used at line 21: “Multiply line 20 by line 19 (maximum amount of credit)”. Lines 20 to 24 are on the lines 20 to 24 page. Line 14, the total available for credit, is on the lines 9 to 14 page.
Edition and line numbers
This page reads the 2025 Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), and its 2025 instructions. They are the current files irs.gov served on 2026-10-18, the files for the tax year 2025 return filed in 2026. The form header says “Attach to Form 1040, 1040-SR, 1040-NR, 1041, or 990-T.” Check the tax year printed on the form you are filling in and use the line numbers on that year’s form, because a different year’s form can number or word its lines differently. The whole form is walked through on the Form 1116 line by line guide page.
Common mistakes
- Stopping at line 15 when it is zero or a loss. The instructions say “However, you must complete line 16 and continue with the form even if line 15 is zero or a loss.”
- Applying adjustments in any order. The instructions say “The adjustments must be made in the order listed.”
- Entering a fraction larger than one on line 19. The instructions say “If line 18 is greater than zero and line 17 is more than line 18, enter” 1.
Related: Form 1116, Qualified Dividends and Capital Gain Tax Worksheet, Form 1040 line by line, and Form 1040 line 12.
Sources
- Instructions for Form 1116, Foreign Tax Credit (Individual, Estate, or Trust) (2025): https://www.irs.gov/pub/irs-pdf/i1116.pdf
- Form 1116, Foreign Tax Credit (Individual, Estate, or Trust) (2025): https://www.irs.gov/pub/irs-pdf/f1116.pdf
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.