Contents What Is the Foreign Tax Credit?  ...... 2 Who Can Take the Credit?  ................ 4 What Foreign Taxes Qualify for the Credit?  .......................................... 4 How To Figure the Credit  .................. 8 Carryback and Carryover  .................. 15 How To Claim the Credit  ................... 17 Simple Example  .................................. 18 Comprehensive Example   .................. 18 How To Get More Information  .......... 26 Index  .................................................... 29 Important Change Photographs   of   missing   children. The Internal Revenue Service is a proud partner with the National Center for Missing and Ex- ploited   Children.   Photographs   of   missing children selected by the Center may appear in this publication on pages that would other- wise  be  blank. You  can  help  bring  these children home by looking at the photographs and calling  1–800–THE–LOST (1–800–843– 5678) if you recognize a child. Important Reminder Exemption from foreign tax credit limit.   If your only foreign income is passive income and the total of all your foreign taxes shown on Forms 1099–DIV, 1099–INT, and similar statements is not more than $300 ($600 if married   filing   jointly),   you   can   make   an election not to be subject to the foreign tax credit limit. If you make this election, you can claim a foreign tax credit without filing Form 1116,  Foreign Tax Credit (Individual, Estate, Trust, or Nonresident Alien Individual).  See How To Figure the Credit. Change    of    address. If    your    address changes from the address shown on your last return, use Form 8822,  Change of Address, to notify the Internal Revenue Service. Introduction If you paid or accrued foreign taxes to a for- eign country on foreign source income and are subject to U.S. tax on the same income, you may be able to take either a credit or an itemized deduction for those taxes. Taken as a   deduction,   foreign   income   taxes   reduce your U.S. taxable income. Taken as a credit, foreign income taxes reduce your U.S. tax li- ability. In most cases, it is to your advantage to take foreign income taxes as a tax credit. The major scope of this publication is the foreign tax credit. The publication discusses: •  Who can take the credit, Department of the Treasury Internal Revenue Service Publication 514 Cat. No. 15018A Foreign Tax Credit for Individuals For use in preparing 1999  Returns