@gideontax ,
(a) " Or perhaps I should instead consider trying to use the foreign earned income tax exclusion to lower my income taxes owed on the Roth conversion. " ------ Earned Income Exclusion is only available for " Active" income such as wages, self-employment etc. The conversion of IRAs to Roth is pension income ( taxed a ordinary income but not as active income , there is also no FICA/ SECA component ).
(b) " Specifically the following: dividend taxes are 28% in Portugal, and 15% for qualified dividends in the U.S. (ignoring exclusions and investment income tax). But Portugal only taxes 7.2% of retirement income, including of course amounts converted from traditional to Roth IRAs. So I'm wondering if there's a way on my U.S. taxes that I can somehow offset the extra taxes paid on dividends in Portugal against the income tax owed in the U.S. on the Roth conversion" ------ I cannot comment and/or suggest on this because I am not familiar with the tax laws of Portugal. I can comment / answer ONLY to the extent the Tax Treaty exposes tax concepts. ------ Fundamentally the US applicability of the US-Portugal tax treaty.
(c) Very strongly suggest a discussion with tax professional; familiar with Portugal tax laws. Conceptually I would guess that there will be significant similarity between Portugal and Brazil tax laws.
(d) The conversion of traditional IRA to Roth IRA i.e. recognition of a distribution of trad. IRA , paying taxes on this and locking it away as Roth to continue to grow, implies essentially paying taxes on an undistributed income and therefore I would assume that to Portugal it would look like an income and taxes as pension income. And therefore that foreign tax would be eligible for foreign tax credit. But note from my answer above that the allowable credit for the year would be the lesser of foreign taxes ;paid or the limited amount due to limitations on form 1116 ( the ratiometric allocation ).
Hope this makes sense .
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pk
