The USA taxes income based on citizenship rather than residence. Starting in 2020, I have lived in New Zealand and am also subject to New Zealand income taxes from the USA derived interest and dividends income. I have no income from NZ sources. I paid taxes in June 2021 to NZ Inland Revenue for March 2020 to March 2021 and seek to claim a Foreign Tax Credit when filing my USA 2021 returns. My reading is it should be dollar for dollar; however, when entering the tax payment amount in 1116 Part 2, the credit claimed for taxes paid does flow thru as a deduction. Turbotax support stated that credit would only offset taxes on foreign income, which does not feel right. Any help would be great.
