I'm a US citizen residing in the US, and I'm not trying to assert tax treaty benefits. Instead, my concern is that TurboTax may be improperly claiming a larger foreign tax credit than I am entitled to. I think my situation is basically identical to the example given in the Form 1116 instructions:
"Country X [in my case, Italy] withholds $25 [in my case, 26% of the dividend amount] of tax from a payment [dividend from Ferrari stock held in a taxable brokerage account] made to you. Under the income tax treaty between the United States and Country X [Italy], you owe only $15 [in my case, 15% of the dividend amount] and can claim a refund from Country X for the other $10 [in my case, 11% of the dividend amount]. Only $15 [15% of the dividend amount] is eligible for the foreign tax credit (whether or not you apply for a refund)."
But TurboTax is computing a foreign tax credit (Form 1040 Schedule 3, Line 1) equal to the entire "foreign tax paid" reported on my Form 1099-DIV (which equals 26% of the dividend amount), and I can't figure out how to tell TurboTax to reduce the foreign tax credit to 15% of the dividend amount. In short, I believe I owe more to the IRS than what TurboTax is calculating.
