Simple Example -- Filled-In Form 1116Betsy Wilson is single, under 65, and is a U.S. citizen. She earned$21,000 working as a night auditor in Pittsburgh. She owns 200 sharesin XYZ mutual fund that invests in German corporations. She received adividend of $620 from XYZ, which withheld and paid tax of $93 toGermany on her dividend. XYZ reported this information to her on Form1099-DIV. Betsy elects to be exempt from the foreign tax credit limit becauseher only foreign taxable income is passive income (dividend of $620)and the amount of taxes paid ($93) is not more than $300. To claim the$93 as a credit, Betsy enters $93 on line 46 of Form 1040. She doesnot file Form 1116. However, she cannot carry any unused foreign taxesto this tax year. If Betsy does not elect to be exempt from the foreign tax creditlimit, she will need to complete a Form 1116 as follows. discount hotels in SzegedTo complete Form 1116, Betsy fills in her name and social securitynumber, and checks the box for passive income. In Part I of the formshe writes the name of the foreign country in column A and shows online 1 the amount of income ($620) and type of income (dividends) shereceived from XYZ. Next, since Betsy does not itemize her deductions,she puts her standard deduction ($4,300) on line 3a and completes 3band 3c. Her gross foreign source income (line 3d) is $620 and grossincome from all sources (line 3e) is $21,620. She enters $123 on line6. Line 7 is $497, the difference between lines 1 and 6. Fruhstuckspension SandnesIn Part II, Betsy checks the "Paid" box and enters on lines Aand 8 the amount of tax XYZ withheld and paid to Germany. In Part III, Betsy figures her credit as shown on the completedform. The computation shows that she may take only $63 of the amountpaid to Germany as a credit against her U.S. income tax. The remaining$30 is available for a carryback and/or carryover. Because this is theonly Form 1116 that Betsy must complete, she does not need to fill inlines 22 through 29 of Part IV. Form 1116, page 1 for Betsy Wilson Form 1116, page 2 for Betsy Wilson | 
