@bander , if I understand you correctly -- 1. You are NOT US citizen/Resident ( Green Card); 2. You do not live in the USA or its territories and 3. you have some US sourced income reported on form 1099- DIV ( probably including Mutual Funds ) from US brokerage.
(A) you are correct that you have to file your US return on form 1040-NR recognizing US sourced income
(B) the "foreign taxes" paid by the Mutual Fund does not enter into the US return because that income is foreign ONLY for US person and the same goes for the foreign taxes paid;
(C) you will have to recognize the "foreign source" income and the "foreign taxes" paid when you file tax return for your home country and under the rules of any treaties that may exist between your country and those countries involved. Not that your country may also require you to recognize the US sourced income and the taxes paid to USA on that return. Thus it is advisable that you prepare the US return first, and then prepare the return for your own country.
Does this make sense ?
