General Category Income

Katelynn Minott, CPA & CEO July 1st, 2026

General category income is foreign-source income, such as wages and salaries, that is placed in the general income category when calculating the Foreign Tax Credit on Form 1116. It includes income that does not belong in another Foreign Tax Credit category.

Why it matters for U.S. expats

The IRS calculates the Foreign Tax Credit separately for each income category, often called a basket. Foreign taxes paid on general category income can offset only the U.S. tax attributed to income in that category.

Classifying income incorrectly can change the credit available, create an incorrect carryover, or result in filing the wrong number of Forms 1116.

Common questions

1. What is general category income for the Foreign Tax Credit?

It is a Foreign Tax Credit category that commonly includes foreign-source wages, salaries, overseas allowances, and certain active business income.

2. Are foreign wages general category income?

Yes. Wages earned for work performed outside the United States are usually foreign-source general category income.

3. Is self-employment income general category income?

It may be, but some business income belongs in the foreign branch category. The Foreign Tax Credit also does not reduce U.S. self-employment tax.

4. What is the difference between general category income and passive category income?

General category income commonly includes wages and active income. Passive category income includes interest, dividends, rents, royalties, and investment gains.

5. Can I claim the Foreign Tax Credit on wages excluded under the FEIE?

No. You cannot claim a Foreign Tax Credit for foreign taxes attributable to income excluded under the Foreign Earned Income Exclusion.

6. Do I need a separate Form 1116 for general category income?

Yes, if you claim a Foreign Tax Credit for that category. A separate Form 1116 is required for each income category.

7. How is the Foreign Tax Credit limitation calculated for general category income?

The credit is limited to the portion of your U.S. tax attributable to foreign-source taxable income in the general category.

8. Can unused Foreign Tax Credits from general category income carry over?

Yes. Unused credits may be carried back one year and forward for up to ten years, but they remain within the general income category.

9. Can high-taxed passive income become general category income?

Possibly. The high-tax kickout rules can move certain highly taxed passive income into another Foreign Tax Credit category.

When to get help

Consider professional help if:

You receive more than one type of foreign income.
You need to separate general and passive category income.
You have foreign business or self-employment income.
You claim both the Foreign Tax Credit and the Foreign Earned Income Exclusion.
You have unused credits carried over from previous years.
You are unsure whether the high-tax kickout rules apply.
Your foreign tax year differs from your U.S. tax year.

Bright!Tax can classify your foreign income, calculate the applicable credit limitations, and prepare each required Form 1116. Get started with Bright!Tax.

Official sources

Reviewed by

Katelynn Minott, CPA & CEO

Last reviewed

June 2026

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