General limited income is income that is not passive income, Section 901(j) income, or income resourced by treaty or Lump-Sum distribution income.
General category income may include:
- Wages, salary, and overseas allowances of an individual as an employee. These wages cannot be excluded from income using the Foreign Earned Income Exclusion.
- Income earned in the active conduct of a trade or business.
- Gains from the sale of inventory or depreciable property used in a trade or business.
- Highly Taxed passive income. Income is "Highly Taxed" if the foreign country's tax rate is higher than the US rate. Example: If the tax rate on your interest income is 45% in the country earned and 30% in the US, the interest you earned would be considered General Limited Income.
Refer to Form 1116 Instructions for more information.
Where do I report General Limited Income?
To enter into the program, please follow the steps listed below.
- Select Federal from the navigation bar
- Select Deductions from the same navigation bar
- Choose to select your forms, then press continue
- Select Credits
- Select Foreign Tax Credit Form 1116
- Choose General limited income