Updated October 17, 2026. Quick answer: Line 1 is the foreign tax credit, the first of the nonrefundable credits on Schedule 3. It is for income tax you paid to a foreign country or U.S. territory. Generally the amount comes from Form 1116, but the instructions give a short exception that lets some filers enter it directly.
IRS worksheets read line by line: Schedule 8812 Credit Limit Worksheet A and Form 2441 Credit Limit Worksheet.
Foreign tax credit (Form 1116) and alternative minimum tax (Form 6251) for 2025, read line by line: Form 1116 line 7, Form 1116 line 8 and Form 1116 lines 9 to 14.
What line 1 asks for
The form’s caption reads “Foreign tax credit. Attach Form 1116 if required”. The instructions explain who may use it: “If you paid income tax to a foreign country or U.S. territory, you may be able to take this credit.” They then add “Generally, you must complete and attach Form 1116 to do so.” The form itself is covered on the Form 1116 page.
The exception: skipping Form 1116
The instructions open the exception with “You don’t have to complete Form 1116 to take this credit if all of the following apply.” The first requirement is “All of your foreign source gross income was from interest and dividends and all of that income and the foreign tax paid on it were reported to you on Form 1099-INT, Form 1099-DIV , or Schedule K-3 (or substitute statement).” Those statements are explained on the Form 1099-DIV foreign tax and Form 1099-INT foreign tax pages.
The second is “The total of your foreign taxes wasn’t more than $300 (not more than $600 if married filing jointly).” The third is “You held the stock or bonds on which the dividends or interest were paid for at least 16 days and weren’t obligated to pay these amounts to someone else.” The fourth is “You aren’t filing Form 4563 or excluding income from sources within Puerto Rico.” The fifth is “All of your foreign taxes were”: “Legally owed and not eligible for a refund or reduced tax rate under a tax treaty”, and “Paid to countries that are recognized by the United States and don’t support terrorism”. For the full wording, the instructions say “For more details on these requirements, see the Instructions for Form 1116.”
Where the number comes from
If you meet all five requirements, the instructions say: “Enter on line 1 the smaller of (a) your total foreign taxes, or (b) the total of the amounts on Form 1040 or 1040-SR, line 16, and Schedule 2, line 1a.” If you do not, the instruction is “See Form 1116 to find out if you can take the credit and, if you can, if you have to file Form 1116.” Line 16 is explained on the Form 1040 line 16 page.
One special case is named at the top of the line: “If you are a shareholder in a controlled foreign corporation and made a section 962 election, see the instructions for Forms 1040 and 1040-SR, line 16, for the foreign tax credit you figured on Form 1118.”
Where it goes next
Line 1 is one of the lines added on line 8 of Part I. The form describes line 8 as “Add lines 1 through 4, 5a, 5b, and 7. Enter here and on Form 1040, 1040-SR, or 1040-NR, line 20”. The instructions add “Include the amount on Schedule 3, line 8, in the amount entered on Form 1040, 1040-SR, or 1040-NR, line 20.” See Schedule 3 lines 7 and 8 for that step and the Form 1040 lines 19, 20 and 21 page for the Form 1040 side. The return it attaches to is explained on the Form 1040 page.
Edition and line numbers
This page reads the 2025 Schedule 3 (Form 1040) and the 2025 Form 1040 instructions, the current files irs.gov served on 2026-10-17. They are the files for the tax year 2025 return, filed in 2026. The schedule says “Attach to Form 1040, 1040-SR, or 1040-NR.” Schedule 3 has no instructions booklet of its own. Its line instructions are part of the Form 1040 instructions, under the heading “Instructions for Schedule 3”. Check the tax year printed on the schedule you are filling in and use the line numbers on that year’s schedule, because a different year’s schedule can number or word its lines differently.
Common mistakes
- Skipping Form 1116 when the foreign taxes are too large. The instructions limit the exception to cases where “The total of your foreign taxes wasn’t more than $300 (not more than $600 if married filing jointly).”
- Skipping Form 1116 when the income was not all interest and dividends. The first requirement is “All of your foreign source gross income was from interest and dividends”.
- Entering total foreign taxes without comparing them to the cap. The instructions say to enter “the smaller of (a) your total foreign taxes, or (b) the total of the amounts on Form 1040 or 1040-SR, line 16, and Schedule 2, line 1a.”
Related: Form 1116, Form 1040 line 16, foreign tax credit and the NIIT, and Form 1040.
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- Instructions for Form 1040 and Form 1040-SR (2025): https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
- Schedule 3 (Form 1040), Additional Credits and Payments (2025): https://www.irs.gov/pub/irs-pdf/f1040s3.pdf
Read from the IRS documents linked above on October 17, 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.