Thanks for responding, DianeC958. With respect, you are not responding to my questions within the context of Form 1116. At issue with this form is whether various types of a US citizen's income are first taxed by another country before the US has (according to its anti-double-taxation treaty with that country) the right to tax the income to the extent that the foreign taxes are less than what the IRS would levy. For example, if country A's taxes on the amount in the income category are more than the IRS's taxes would have been, the citizen would pay the IRS zero taxes on that income. But if the IRS's taxes were greater than country A's taxes, then the citizen would owe the IRS the difference. So in filling in Form 1116 it is critical that one knows which country is the one to tax a US citizen first. To avoid double-taxation, the US taxpayer needs to notify "the country that taxes second" that s/he is eligible for a "Foreign Income Tax Credit" for the taxes they are paying to "the country that taxes first". When completing a 1040, Form 1116 is where one communicates to the IRS that you have already paid part (or all) of the taxes that you would have paid the IRS if the US were "the country that taxes first." The hitch in all this is that these taxes are specific to income types (e.g., passive, general, re-sourced).
Deciding on a category generally depends on the income source. That is, if your income was from wages earned in country A while you were a resident in country A, then country A is (as I said, generally) "the country that taxes first." This income would be classified as "General category income" on Form 1116. Hitch number 2 is that some types of income are "Re-sourced by treaty." This means that a deal has been made between the US and country A that a specific type (passive, general, or some other sort) of income is taxed first in your country of residence even though its source is in the US. My questions have thus foremost to do with whether or not distributions from 403b & 408 plans, income from a US rental property, and Social Security payments should be reported on Form 1116 at all. The form is only for reporting income that the US "taxes second," right? If the US is "the country that taxes first" on a type of income, than that income would not be reported on the form.
So getting back to your answers: Of course, distributions from 403b & 408 plans, rental income, and Social Security benefits are all passive income. But since each has its source in the US, knowing whether or not these are classified as such on Form 1116 involves knowing whether any or all of them are re-sourced to the US citizen's country of residence. Maybe TurboTax does not have the resources to research every anti-double-taxation treaty that the US has negotiated with foreign countries. If so, this too would be useful to know.
I realize that TurboTax experts like you are flooded with questions at this time of year. However, might you please revisit this question?
