Schedule K (Form 1118), Foreign Tax Carryover Reconciliation Schedule, is the Internal Revenue Service (IRS) schedule that a corporation attaches to Form 1118 to reconcile its prior year foreign tax carryover with its current year carryover. It is completed separately for each category of income, and this page covers only that Form 1118 schedule. On FillingPDF you can fill out the form online and download or print the completed PDF; the IRS publishes the form and its instructions at www.irs.gov/Form1118.
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What is Schedule K (Form 1118)?
Schedule K (Form 1118), Foreign Tax Carryover Reconciliation Schedule, is the IRS schedule that reconciles a corporation's prior year foreign tax carryover with its current year foreign tax carryover, reporting a running balance of all carryover activity since the prior year income tax return.
The schedule is attached to Form 1118 and is not filed on its own. It is issued by the Internal Revenue Service under OMB No. 1545-0123, and the revision printed on it is Rev. December 2018. The IRS instructions say the schedule works in three stages:
- Lines 1 through 3 compute the adjusted foreign tax carryover from the prior tax year that is available for credit in the current year. The line 3 total is included on Form 1118, Schedule B, Part II, line 5.
- Line 4 shows the carryover used in the current year, which happens when the corporation has an excess limitation.
- Lines 5 through 8 show carryover that expired unused, carryover generated in the current year, the amount carried back, and the carryover to the following tax year.
The columns run from the 10th preceding tax year through the current tax year, with a subtotal on page 1 and totals in column (xiv) on page 2. A separate Schedule K is used for each separate category of income, identified by the code on line a.
Who needs to file Schedule K (Form 1118)?
With respect to each separate category of income, any corporation filing Form 1118 that has a foreign tax carryover in the prior tax year, the current tax year, or both must file Schedule K (Form 1118) for that separate category of income.
- Use a separate Schedule K for each category of income; the category code on line a must match the code on the Form 1118 to which the schedule is attached.
- If a sanctioned-country code 901j is entered on line a, enter the country code for the sanctioned country on line b. If code RBT is entered, enter the treaty country code on line c. Use the same country code shown on the attached Form 1118.
- Do not complete Schedule K for section 951A category income. The IRS instructions explain that the carryover provisions of section 904(c) do not apply to foreign taxes assigned to that category.
Everything reported must be in English, and all amounts must be stated in U.S. dollars.
When to file Schedule K (Form 1118)
Schedule K (Form 1118) is completed whenever the corporation files Form 1118 and has a foreign tax carryover in the prior year, the current year, or both. It has no due date of its own: it is attached to Form 1118 and travels with it. The form covers a calendar year or another tax year, which you enter in the heading.
If the actual carryback amount is not available when the current year return is filed, an estimated or tentative amount may be entered on line 7. When the estimate differs from the actual amount, the difference is entered on line 2a of the next year's Schedule K.
A corporation amending its 2009 foreign tax credit within the 10-year period described in section 6511(d)(3), or section 6511(c) if the period is extended by agreement, uses the Line 1 Reconciliation Worksheet in the instructions to compute line 1.
Documents you need
- Form 1118, to which Schedule K is attached; the category code and any country code on Schedule K must match it.
- The prior year Schedule K (Form 1118), whose line 8 amounts are carried to line 1 of the current year schedule.
- For a corporation amending its 2009 foreign tax credit within the 10-year period: the Line 1 Reconciliation Worksheet from the instructions, completed to compute line 1.
How to fill out Schedule K (Form 1118)
Enter the tax year, name and EIN
Fill in the calendar year, or the beginning and ending dates of the other tax year, then the name of the corporation and its employer identification number.
Enter the separate category code
On line a, enter the same separate category code shown on the Form 1118 to which this schedule is attached. Complete line b (country code for code 901j) or line c (treaty country code for code RBT) only when that code applies.
Carry over last year's balances on line 1
Enter on line 1 the amounts from the appropriate columns of line 8 of the prior year Schedule K, shifted one column. For example, line 8, column (ii) of last year goes to line 1, column (i).
Report adjustments on line 2
Use line 2a for the carryback adjustment, entered in column (xii), and line 2b for section 905(c) redeterminations. Use lines 2c onward for other adjustments, with a brief description after the letter.
Combine lines 1 and 2 on line 3
Line 3 is the adjusted foreign tax carryover from the prior tax year. Include the column (xiv) total on Form 1118, Schedule B, Part II, line 5.
Enter carryover used on line 4
If you have a current year excess limitation, enter the carryover used as a negative number, starting with column (i). The amount in a column cannot exceed line 3 for that column or the remaining excess limitation.
Enter expired carryover on line 5
Complete line 5 only for the 10th preceding tax year in column (i), plus the Subtotal and Totals columns. Combine lines 3 and 4 for column (i) and enter the result as a negative number.
Enter carryover generated on line 6
If you have current year excess foreign taxes, enter the unused amount in column (xiii) and the same amount in the Totals column (xiv).
Enter the carryback on line 7
Enter the actual or estimated amount of line 6 carried back to the first preceding tax year, as a negative number. It cannot exceed the current year excess limitation.
Combine lines 3 through 7 on line 8
Line 8 is the foreign tax carryover to the following tax year. On page 2, column (viii) takes the column (vii) subtotal from page 1.
Review and download the completed PDF
Check that every amount is in U.S. dollars, the signs are right and the category code matches Form 1118. Download or print the completed PDF from FillingPDF and attach it to Form 1118.
How to submit Schedule K (Form 1118)
Schedule K (Form 1118) is submitted as an attachment to Form 1118; the form prints no separate address, portal or appointment rule.
- With Form 1118: attach the completed schedule, one for each separate category of income, to the Form 1118 it supports. Send the package through the channel you use for Form 1118.
- Line 3 link: carry the column (xiv) total of line 3 to Form 1118, Schedule B, Part II, line 5.
- Instructions and updates: the form directs you to www.irs.gov/Form1118 for the instructions and the latest information.
FillingPDF lets you fill out and download the PDF; submission follows the channels above.
Common mistakes to avoid
- Completing Schedule K for section 951A category income; the instructions say not to, because section 904(c) carryover provisions do not apply to it.
- Using one Schedule K for several categories of income instead of a separate Schedule K for each category.
- Entering a separate category code on line a that differs from the code on the attached Form 1118.
- Entering amounts on lines 4, 5 and 7 as positive numbers; the form says to enter them as negative numbers.
- Completing line 5 for any column other than the 10th preceding tax year, the Subtotal and the Totals columns.
- Entering a line 7 carryback larger than the current year excess limitation, which the instructions say it cannot exceed.
- Carrying back to the first preceding tax year when that year was not an excess limitation year.
- Leaving the difference between an estimated and an actual carryback off line 2a of the following year's Schedule K.
- Entering amounts in a foreign currency or descriptions in another language; everything must be in English and U.S. dollars.
Frequently asked questions
What is Schedule K (Form 1118)?
Schedule K (Form 1118), Foreign Tax Carryover Reconciliation Schedule, is the IRS schedule attached to Form 1118 that reconciles a corporation's prior year foreign tax carryover with its current year carryover. It shows a running balance of all carryover activity since the prior year return.
Who must file Schedule K (Form 1118)?
Any corporation filing Form 1118 that has a foreign tax carryover in the prior year, the current year, or both must file it for each separate category of income. Do not complete it for section 951A category income.
Do I need a separate Schedule K for each category of income?
Yes. The form says to use a separate Schedule K (Form 1118) for each category of income. Enter on line a the same separate category code shown on the Form 1118 to which that Schedule K is attached.
Where do I send Schedule K (Form 1118)?
You attach it to Form 1118 and send it with that form. The schedule prints no address or portal of its own; the form points to www.irs.gov/Form1118 for instructions and the latest information.
Can I fill out Schedule K (Form 1118) online?
Yes. You can fill out the fillable PDF online on FillingPDF and download or print it. FillingPDF is an independent service and does not file the schedule with the IRS; you submit it with Form 1118 through the IRS channels.
What goes on line 7 if I do not know the actual carryback yet?
You may enter an estimated or tentative amount on line 7 when the actual amount is not available at filing. If it differs from the actual carryback, the difference is entered on line 2a of the following year's Schedule K.
Where does the line 3 total go on Form 1118?
The column (xiv) total of line 3 is included on Form 1118, Schedule B, Part II, line 5. There it combines with other amounts, and with carrybacks for an amended return, to give the foreign taxes available for credit in the current year.
Can I enter amounts in a foreign currency?
No. The instructions say all information on Schedule K must be in English and all amounts must be stated in U.S. dollars.
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