Updated October 18, 2026. Quick answer: Lines 20 to 24 turn the fraction into a dollar limit. Line 20 is your U.S. income tax, line 21 multiplies it by line 19, line 22 is a special increase, line 23 adds them, and line 24 is the smaller of line 14 or line 23 for this category. Lines 20, 22 and 24 have instruction paragraphs.
Line 20: the U.S. tax the credit is measured against
The instructions say “Enter on line 20 your total U.S. income tax against which the credit is allowed (regular tax liability, as defined in section 26(b)(1)).” They add “Note: Regular tax liability does not include the section 1411 net investment income tax.” That is why the credit cannot reduce that tax; see why the foreign tax credit cannot offset the NIIT.
For individuals: “Enter the total of Form 1040, 1040-SR, or 1040-NR, line 16, and Schedule 2 (Form 1040), Part I, line 1z, less any tax included on line 16 from Form 4972.” The tax side of the return is on the Schedule 2 (Form 1040) page. Two exceptions: “Don’t complete line 20 for separate category e (section 901(j) income), discussed earlier.” and “If you are completing line 20 for separate category g (lumpsum distributions), enter the amount from line 5 of the Worksheet for Lump-Sum Distributions.”
Estates, trusts and other filers have their own entries. “Form 1041 filers. Enter the amount from Form 1041, Schedule G, line 1a and 1d.” For Form 8978 filers the instructions say “If, after your adjustment, the amount of your tax is zero or less, enter” zero on line 20.
Line 21: the maximum amount of credit
The form says “Multiply line 20 by line 19 (maximum amount of credit)”. The instructions have no separate paragraph for line 21. Line 19 is covered on the lines 15 to 19 page.
Line 22: increase in limitation
The caption is “Increase in limitation (section 960(c)) (see instructions)”. The instructions say “Report on line 22 any such increase in limitation.” It applies when “you may be eligible for an increase in your foreign tax credit limitation under section 960(c)”. They add “If the line 22 amount exceeds your U.S. income tax as reported on line 20, the excess is deemed an overpayment of tax and can be claimed on your income tax return as a refundable credit”. Most filers have nothing on this line.
Line 23 and line 24: the smaller amount
Line 23 reads “Add lines 21 and 22”; the instructions have no separate paragraph for it. Line 24 reads “Enter the smaller of line 14 or line 23. Enter here and on the appropriate line of Part IV.” The instructions explain: “The maximum foreign tax credit you can claim in the current year is generally limited to the allocated amount of U.S. tax imposed on the foreign income, or the actual amount of foreign tax paid or accrued on the foreign income (after reductions required on line 12), whichever is less.”
A computed illustration, not an IRS example: with $10,000 on line 20 and 0.1 on line 19, line 21 is $10,000 times 0.1, which is $1,000. With $0 on line 22, line 23 is $1,000. If line 14 is $3,300 (the computed figure from the line 14 illustration) then the smaller of the two is $1,000 and line 24 is $1,000.
Where the number comes from
Line 20 comes from your Form 1040 and Schedule 2, or the entity’s return for estates and trusts. Line 19 comes from the fraction, and line 14 from the first half of Part III. Line 22 comes only from the section 960(c) rule. Lines 21 and 23 are arithmetic.
Where it goes next
Line 24 is entered “here and on the appropriate line of Part IV”. The 2025 instructions note “We revised the text on Form 1116, line 24, to reflect this change.” The summary is on the lines 25 to 32 page.
If the amount on line 23 is smaller, the instructions say “see Pub. 514 for more information on carryback and carryforward provisions”.
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
- Using the wrong tax for line 20. The instructions say “Note: Regular tax liability does not include the section 1411 net investment income tax.”
- Completing line 20 for a section 901(j) form. The instructions say “Don’t complete line 20 for separate category e (section 901(j) income), discussed earlier.”
- Entering the larger amount on line 24. The form says “Enter the smaller of line 14 or line 23.”
Related: Form 1116, why the foreign tax credit cannot offset the NIIT, Schedule 2 (Form 1040), and Form 1040 lines 17 and 18.
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.