Get your taxes done using TurboTax

Yes, there is an explanation for that.  When you originally reported the foreign taxes paid at $600, there was no requirement to report a Form 1116 in your return because any amount $600 (MFJ) or less does not have a Form 1116 filing requirement.

Now, the new amount at $601 requires a Form 1116 in order to claim the credit.  That is why your original amount of $600 was erased. Also, you will not offset your interest income with the foreign tax paid because these are separate categories in your return.

To file a Form 1116 and claim your credit:

1. Go to Federal
2. Deductions and credits 
3. Estimate and other taxes paid 
4. Foreign Tax Credit>start or revisit
5. When it asks We just need to check if you have any uncommon situations indicate I paid foreign taxes on income I earned while working in another country. 
6. At some point in the interview, it will ask if you wish to take a deduction or a credit. If you are able to itemize deductions, you may consider taking the deduction.
7. There will be questions in the next screen asking you the description of the Foreign Taxes paid and the amount.
8. If you find that this has no effect on your tax return, you may circle-back and choose you wish to take a credit.
9. Navigate and record the entries that the program asks for and when you reach the page that mentions Foreign Tax Credit Worksheet, this is where you take notice.
10. The first that you will be asked is what category of income is it, you will say Passive income.
11. Next screen will say Country Summary, select add a country 
12. When it says Other Gross Income - XXXX, Here you put in the Gross Amount you earned in that country. 
13. Then you will navigate through the screens until you come to a screen that says Foreign Taxes Paid - XXXX, here is where you record the amount paid under Foreign Taxes.
14. Finish out the section.