From 1065

Form 1116 is not generated at the entity level. You will report the foreign taxes paid, and these will be allocated to the partners on a k-1.  The partners will then claim the foreign tax credits in their own personal returns and generate their own Form 1116.

Thanks Dave! Where do I enter the foreign tax credit in the Form 1065? I don't see a place to enter it.

In prior years, there was a Form 1116 within the Form 1065. I don't see anything like that in the current 2024 version.

Yes, you will need to attach Schedule K-3 to report your foreign tax credit. This is required if you are reporting a foreign tax credit to be distributed to your partners. Here is how you may get started. I must warn you that this form requires quite a bit of information. You may wish to receive help from a CPA this year so that you can get an idea how to report it in subsequent years. To get started.

 

• Go to the Forms section of your Business return
• Up at the top of the return, select open form.
• Type in K-3 in the search bar.
• Select K-3 page 1
• After entering this section, select Quick Zoom to page 2
• After entering information in this section go to Quick Zoom page 3 and continue to do this until all pages in the K-3 have been completed.
• You may not have data for all of these entries but complete this with your very best effort.
• On the K-1 partner worksheet. Make sure you checked Box 16 to indicate there is K-3 attached.

This year, the IRS is requiring more transparency than in the past when claiming the foreign tax credit. It has made the reporting of this credit much more difficult than in the past. Please read the link I included below for more detailed information.

 

Partnership Instructions for Schedules K-2 and K-3 (Form 1065) (2024)