General Category Income is a category of foreign‑source income used on Form 1116 for the Foreign Tax Credit. It includes active‑type foreign income that does not fall into any of the other six income categories:
- Section 951A (GILTI) income
- Foreign branch income
- Passive income
- Section 901(j) income
- Treaty‑resourced income
- Lump‑sum distribution income
Note: TaxSlayer's program labels this category "General/Limited Income" in the menu. The IRS calls it "General Category Income" — they're the same thing, so don't worry if you see both terms.
What types of income belong in General Category Income?
The IRS defines General Category income as a catch‑all bucket for most active foreign earnings that don't fit into the more specific categories.
Report income in this section if it includes:
1. Foreign Wages, Salary, or Overseas Allowances
Foreign compensation for work performed abroad that is NOT excluded under the Foreign Earned Income Exclusion (FEIE).
2. Income Earned in a Trade or Business
This includes income earned through active business operations abroad, such as:
- Self‑employment income earned from working in a foreign country
- Service‑based income from professional activities performed overseas
3. Gains From Business Activities
Including:
- Gains from the sale of inventory in a foreign country
- Gains from selling depreciable business property used in a trade or business abroad
4. Highly Taxed Passive Income
Passive income (interest, dividends, etc.) can be treated as General Category income instead of Passive if the foreign tax paid on it is unusually high relative to the income.
If your tax documents (such as a 1099‑DIV or Schedule K‑3) show foreign tax withheld at a very high rate compared to the income itself, that income may already be labeled as "high‑taxed" or categorized as General rather than Passive on those documents. If you're not sure which category applies, check how your statement categorizes it, or talk with a tax professional — this determination involves a technical calculation you generally don't need to do by hand.
5. Other Active Foreign Earnings
General Category Income broadly includes "active" income such as:
- Wages or service fees performed overseas
- Profits from selling goods abroad
- Active income generated by materially participating in business operations
What Should NOT Be Reported Here
Do not enter the following in this section (these have their own categories and require their own Form 1116):
- Section 951A (GILTI) income
- Foreign branch income
- Passive category income (dividends, interest, rents, royalties, annuities, investment gains)
- Section 901(j) income
- Treaty‑resourced income
- Lump‑sum distributions
Program Navigation (Where to Enter)
To report General Category Income in the program:
Federal → Deductions → Select My Forms → Credits → Foreign Tax Credit → Form 1116 → General/Limited Income
(Note: "Date Paid / Date Accrued" refers to the date the foreign taxes were paid or accrued and is required.)