I called TurboTax support this morning and the agent was very helpful. Foreign interest income needs to be reported under Less Common Income --> Miscellaneous Income --> Other reportable income. The agent recommended to enter the net interest amount rather than reporting gross income and then trying to claim a foreign tax credit. If entered this way, this income will show up on Schedule 1, Line 8z. You need then indicate this income also on the form 8938. I guess I answered my own question at the end 😉
