Income Tax

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Tax

19. Income Tax

The provision for income tax was as follows:

	Years Ended December 31,
	2021		2020		2019
	(In millions)
Current:
U.S. federal	$	62	$	271	$	(189)
U.S. state and local	38		27		4
Non-U.S.	795		882		850
Subtotal	895		1,180		665
Deferred:
U.S. federal	837		(115)		(235)
U.S. state and local	(2)		1		—
Non-U.S.	(179)		443		456
Subtotal	656		329		221
Provision for income tax expense (benefit)	$	1,551	$	1,509	$	886

The Company’s income (loss) before income tax expense (benefit) was as follows:

	Years Ended December 31,
	2021		2020		2019
	(In millions)
Income (loss):
U.S.	$	4,841	$	2,970	$	2,094
Non-U.S.	3,285		3,957		4,701
Total	$	8,126	$	6,927	$	6,795

The reconciliation of the income tax provision at the U.S. statutory rate to the provision for income tax as reported was as follows:

	Years Ended December 31,
	2021		2020		2019
	(In millions)
Tax provision at U.S. statutory rate	$	1,706	$	1,455	$	1,427
Tax effect of:
Dividend received deduction	(40)		(34)		(37)
Tax-exempt income	(36)		(45)		(64)
Prior year tax (1), (2)	(127)		(27)		(179)
Low income housing tax credits	(178)		(202)		(254)
Other tax credits	(46)		(45)		(52)
Foreign tax rate differential (3), (4), (5)	267		414		395
Change in valuation allowance	1		(5)		(22)
U.S. Tax Reform impact (6)	—		—		(326)
Other, net (7)	4		(2)		(2)
Provision for income tax expense (benefit)	$	1,551	$	1,509	$	886

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(1)As discussed further below, prior year tax primarily includes a non-cash benefit related to uncertain tax positions of $117 million and $158 million for the years ended December 31, 2021 and 2019, respectively.

(2)For the year ended December 31, 2020, prior year tax primarily includes a $40 million tax benefit related to an Internal Revenue Service (“IRS”) audit matter.

(3)For the year ended December 31, 2021, foreign tax rate differential includes tax charges of $50 million related to the pending disposition of MetLife Poland and disposition of MetLife Greece, $41 million related to the sale of MetLife Seguros and $30 million related to the U.S. tax on Global Intangible Low-Taxed Income (“GILTI”) of which $42 million is a current year charge offset by a $12 million tax benefit revising the 2020 estimate. See Note 3 for information on the Company’s business dispositions.

(4)For the year ended December 31, 2020, foreign tax rate differential includes tax charges of $60 million and $24 million related to the sales of MetLife Seguros de Retiro and MetLife Russia, respectively, and $43 million related to the U.S. tax on GILTI. See Note 3 for information on the Company’s business dispositions.

(5)For the year ended December 31, 2019, foreign tax rate differential includes tax charges of $61 million from the definitive agreement to sell MetLife Hong Kong and $12 million related to GILTI, of which $35 million is a current year charge offset by a $23 million tax benefit revising the 2018 estimate. See Note 3 for information on the disposition of MetLife Hong Kong.

(6)For the year ended December 31, 2019, U.S. Tax Reform impact includes a $317 million tax benefit related to the deemed repatriation transition tax and $9 million related to the effect of sequestration on the alternative minimum tax credit.

(7)For the year ended December 31, 2021, other primarily includes tax charges of $54 million related to the sale of MetLife P&C offset by a tax benefit of $53 million related to a non-cash transfer of assets from a wholly-owned U.K. subsidiary to its U.S. parent.

Deferred income tax represents the tax effect of the differences between the book and tax bases of assets and liabilities. Net deferred income tax assets and liabilities consisted of the following at:

	December 31,
	2021		2020
	(In millions)
Deferred income tax assets:
Policyholder liabilities and receivables	$	3,787	$	3,890
Net operating loss carryforwards (1)	235		301
Employee benefits	583		673
Capital loss carryforwards	9		9
Tax credit carryforwards (2)	825		922
Litigation-related and government mandated	95		126
Total gross deferred income tax assets	5,534		5,921
Less: Valuation allowance (1)	299		309
Total net deferred income tax assets	5,235		5,612
Deferred income tax liabilities:
Investments, including derivatives	4,167		4,421
Intangibles	1,188		1,387
Net unrealized investment gains	5,551		7,422
DAC	3,471		3,162
Other	362		134
Total deferred income tax liabilities	14,739		16,526
Net deferred income tax asset (liability) (3)	$	(9,504)	$	(10,914)

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(1)The Company has recorded a deferred tax asset of $235 million related to U.S. state and non-U.S. net operating loss carryforwards and an offsetting valuation allowance for the year ended December 31, 2021. Certain net operating loss carryforwards will expire between 2022 and 2041, whereas others have an unlimited carryforward period.

(2)Tax credit carryforwards for the year ended December 31, 2021 primarily reflect general business credits expiring between 2038 and 2041 and are reduced by $44 million related to unrecognized tax benefits.

(3)On the consolidated balance sheet for the years ended December 31, 2021 and 2020, $9,693 million and $11,008 million, respectively, is reported in Deferred income tax liability for jurisdictions in a net deferred income tax liability position and $189 million and $94 million, respectively, of a deferred income tax asset is reported in Other assets for jurisdictions in a net deferred income tax asset position.

The Company has not provided for U.S. deferred taxes on the remaining excess of book bases over tax bases of certain investments in non-U.S. subsidiaries that are essentially permanent in duration. The amount of deferred tax liability related to the Company’s remaining basis difference in these non-U.S. subsidiaries was $260 million at December 31, 2021.

The Company files income tax returns with the U.S. federal government and various U.S. state and local jurisdictions, as well as non-U.S. jurisdictions. The Company is under continuous examination by the IRS and other tax authorities in jurisdictions in which the Company has significant business operations. The income tax years under examination vary by jurisdiction and subsidiary. The Company is no longer subject to U.S. federal, state, or local income tax examinations for years prior to 2014. In material non-U.S. jurisdictions, the Company is no longer subject to income tax examinations for years prior to 2015.

In 2021, the Company filed amended Federal income tax returns with the IRS for MetLife, Inc. and subsidiaries for tax years 2010 through 2013. In 2021, the IRS reviewed and acknowledged acceptance of the 2010 through 2013 amended

Federal income tax returns and closed the years to further audit. Accordingly, in 2021, the Company recorded a non-cash benefit to net income of $53 million in provision for income tax expense (benefit). In addition, in 2021, the IRS concluded its Federal income tax audit of American Life for tax years 2010 through 2013. Accordingly, in 2021, the Company recorded a non-cash benefit to net income of $42 million, net of tax, comprised of a $34 million tax benefit recorded in provision for income tax expense (benefit) and a $10 million interest benefit ($8 million, net of tax) included in other expenses.

The Company filed refund claims in 2017 with the IRS for 2000 through 2002 to recover tax and interest predominantly related to the disallowance of certain foreign tax credits for which the Company received a statutory notice of deficiency in 2015 and paid the tax thereon. The disallowed foreign tax credits relate to certain non-U.S. investments held by MLIC in support of its life insurance business through a U.K. investment subsidiary that was structured as a joint venture until early 2009. In 2020, the Company received refunds from these claims filed in 2017, and as a result, the Company recorded a $28 million interest benefit ($22 million, net of tax) included in other expenses. For tax years 2000 through 2002 and tax years 2007 through 2009, the Company entered into binding agreements with the IRS in 2019 under which all remaining issues regarding the foreign tax credit matter noted above were resolved. Accordingly, in 2019, the Company recorded a non-cash benefit to net income of $226 million, net of tax, comprised of a $158 million tax benefit recorded in provision for income tax expense (benefit) and a $86 million interest benefit ($68 million, net of tax) included in other expenses.

The Company’s overall liability for unrecognized tax benefits may increase or decrease in the next 12 months. For example, U.S. federal tax legislation and regulation could impact unrecognized tax benefits. A reasonable estimate of the increase or decrease cannot be made at this time. However, the Company continues to believe that the ultimate resolution of the pending issues will not result in a material change to its consolidated financial statements, although the resolution of income tax matters could impact the Company’s effective tax rate for a particular future period.

A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:

	Years Ended December 31,
	2021		2020		2019
	(In millions)
Balance at January 1,	$	272	$	256	$	1,111
Additions for tax positions of prior years	19		16		6
Reductions for tax positions of prior years (1)	(112)		(1)		(493)
Additions for tax positions of current year	5		12		13
Reductions for tax positions of current year	(18)		—		—
Settlements with tax authorities (2)	(3)		(1)		(381)
Lapses of statute of limitations	—		(10)		—
Balance at December 31,	$	163	$	272	$	256
Unrecognized tax benefits that, if recognized, would impact the effective rate	$	103	$	203	$	194

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(1)    The decreases in 2021 and 2019 are primarily related to non-cash benefits from tax audit settlements.

(2)    The decrease in 2019 is primarily related to tax audit settlements, of which $377 million was reclassified to the current income tax payable account.

The Company classifies interest accrued related to unrecognized tax benefits in interest expense, included within other expenses.

Interest was as follows:

	Years Ended December 31,
	2021		2020		2019
	(In millions)
Interest expense (benefit) recognized on the consolidated statements of operations (1)	$	(36)	$	12	$	(179)
			December 31,
			2021		2020
			(In millions)
Interest included in other liabilities on the consolidated balance sheets			$	15	$	51

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(1)    The decreases in 2021 and 2019 are primarily related to the tax audit settlements, of which $10 million and $60 million, respectively, were recorded in other expenses, and $26 million and $119 million, respectively, were reclassified to the current income tax payable account.