This is the exact opposite of what I believe is the correct method of handling based upon everything that I have read. As a USA citizen with only USA sourced income, the only way that you can reduce or eliminate your USA tax obligation is to re-source that income by completing form 1116 so that you can then get the foreign tax credit due and necessary to reduce or eliminate the USA tax liability on that very same income. The questions above were more focused on HOW this is properly recorded using the TurboTax software. To be specific, in my case, I have the 1099 interest forms from both Canada and the USA (my only sources of income). I am a USA citizen, but reside in Italy where I am also now a citizen. I will therefore owe tax in Italy on my worldwide income. As a USA citizen, I of course have a filing obligation, but to avoid being double taxed on that income, need to use FTC’s and the only way to do that is to resource that USA sourced income to be Italy sourced on form 1116. The issue is that I do NOT have any foreign tax showing in box 6 on any of the form 1099’s, so am not sure how to reflect the tax that I WILL pay to Italy on that 1099 income. Do I plug a tax paid number into box 6 on each 1099 and say it was/will be paid to Italy? That would populate form 1116 with the foreign tax that will be paid to Italy and then also show the applicable FTC for the income that was re-sourced. Kindly advise step by step as I use TurboTax online and have for many years now but just moved to Italy in 2024.
