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Form 1116 Lines 6 and 7: Foreign Taxable Income or Loss

Updated October 18, 2026. Quick answer: Line 6 adds up the deductions and losses from lines 2 to 5. Line 7 subtracts that total from the foreign gross income on line 1a, and the result is your taxable income or loss from sources outside the United States for the category. Both lines are arithmetic on lines you already filled in.

What lines 6 and 7 ask for

The form’s captions are short. Line 6 reads “Add lines 2, 3g, 4a, 4b, and 5”. Line 7 reads “Subtract line 6 from line 1a. Enter the result here and on line 15, page 2”. The instructions have no separate paragraph for lines 6 and 7, so the form’s captions are the guide. This page is part of the Form 1116 walk-through.

Line 6: the total of lines 2 to 5

Line 6 collects the amounts from the lines 2 to 5 page. The pieces are line 2, line 3g, line 4a, line 4b and line 5, and line 3g is the pro rata share, not the line 3c total. The Part I heading tells you what the lines are building toward: “Taxable Income or Loss From Sources Outside the United States”. A computed illustration, not an IRS example: line 2 at $900 plus line 3g at $200 makes line 6 $1,100 when lines 4a, 4b and 5 are blank.

Line 7: the foreign taxable income or loss

Line 7 starts from the line 1a amount on the lines 1a and 1b page. A computed illustration, not an IRS example: line 1a at $5,000 less line 6 at $1,100 makes line 7 $3,900. If line 6 is larger than line 1a, the subtraction gives a negative number, which is why the Part I heading says income or loss.

Special columns that touch line 6

Two instruction paragraphs name line 6 by number. For income that is not reported country by country, “Total all section 863(b) deductions in the applicable category and in the same column enter the totals on lines 2 through 6.” For high-taxed passive income, “Add all deductions that are definitely related or apportioned to passive income that is treated as another category of income because it is high taxed and enter the total amount of those deductions on line 6 in the appropriate “HTKO” column.” That paragraph also says “Don’t enter any amounts on lines 2 through 5 for your “HTKO” column.”

Where the number comes from

Nothing new is looked up here. Line 6 comes from lines 2 to 5 of the same column, and line 7 comes from line 1a minus line 6. Each country column is figured on its own, and the form has a total column that adds the country columns. The foreign tax paid on this income is entered separately, in Part II, covered on the Part II and line 8 page.

Where it goes next

Line 7 is carried to the next page of the form. Line 15 says “Enter the amount from line 7. This is your taxable income or (loss) from sources outside the United States (before adjustments) for the category of income checked above Part I.” The steps after that, the adjustments on line 16 and the fraction on line 19, are on the lines 15 to 19 page. The credit that results is claimed on Schedule 3 line 1.

Edition and line numbers

This page reads the 2025 Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), and its 2025 instructions, the current files irs.gov served on 2026-10-18. They are the files for the tax year 2025 return, filed in 2026. The form’s own 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.

Common mistakes

  • Adding line 3c instead of line 3g. The form says “Add lines 2, 3g, 4a, 4b, and 5”
  • Subtracting from the wrong line. The form says “Subtract line 6 from line 1a. Enter the result here and on line 15, page 2”
  • Forgetting that high-taxed passive income has its own column. The instructions say “Don’t enter any amounts on lines 2 through 5 for your “HTKO” column.”

Related: Form 1116, Schedule 3 line 1, the foreign tax credit and the NIIT, and Form 1040 lines 17 and 18.

Sources

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.

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