Carryover

A carryover allows an unused tax benefit to be applied to a future tax year. For U.S. expats, this commonly means carrying unused Foreign Tax Credits forward to reduce U.S. tax in a later year.

Why it matters for U.S. expats

Foreign taxes may exceed the Foreign Tax Credit allowed in a particular year. After the required one-year carryback, unused credits can be carried forward for up to ten years.

The carryover must remain in the same income category and can only be used when that category has sufficient Foreign Tax Credit limitation.

Common questions

1. How long can unused Foreign Tax Credits carry forward?

They can be carried forward for up to ten years.

2. Do Foreign Tax Credits carry over automatically?

Unused credits remain available under the tax rules, but they must be calculated, tracked and reported correctly on subsequent returns.

3. Do I have to carry unused Foreign Tax Credits back first?

Yes. Eligible unused credits must first be carried back one year before any remaining amount is carried forward.

4. Can Foreign Tax Credit carryovers move between income categories?

No. A carryover remains in the same Foreign Tax Credit category in which it arose.

5. Can I use a general category carryover against passive category income?

No. General and passive category credits are calculated and tracked separately.

6. Can a Foreign Tax Credit carryover expire?

Yes. An unused credit expires if it is not used within the ten-year carryover period.

7. Can GILTI or NCTI Foreign Tax Credits carry over?

No. The standard carryback and carryover rules do not apply to unused credits in the Section 951A category.

8. How do I report a Foreign Tax Credit carryover?

Carryovers are calculated on Form 1116 and reconciled using Schedule B (Form 1116).

9. What is the difference between a carryover and a carryback?

A carryover applies an unused benefit to a future year. A carryback applies it to an earlier year.

Related forms

• Form 1116: Claiming the Foreign Tax Credit
• Schedule B (Form 1116): Foreign Tax Carryover Reconciliation Schedule
• Form 1040: Filing a U.S. tax return from abroad

When to get help

Consider professional help if:

• You have unused Foreign Tax Credits from previous years.
• You have carryovers in more than one income category.
• You changed between the Foreign Tax Credit and the Foreign Earned Income Exclusion.
• You cannot confirm when a carryover arose or when it expires.
• You have credits from several countries.
• A foreign tax refund or redetermination changed your available credits.
• You did not report the carryover on an earlier return.

Bright!Tax can reconstruct your Foreign Tax Credit history, track available carryovers and apply them correctly to future returns. Get started with Bright!Tax.

Related Bright!Tax guides

• How to calculate Foreign Tax Credit carryovers
• How to calculate the Foreign Tax Credit
• Foreign Tax Credit vs. Foreign Earned Income Exclusion

Official sources

• IRS: Publication 514, Foreign Tax Credit for Individuals
• IRS: Topic No. 856, Foreign Tax Credit
• IRS: Instructions for Form 1116
• IRS: Instructions for Schedule B (Form 1116)

Reviewed by

Katelynn Minott, CPA & CEO

Last reviewed

June 2026