We have been doing this for several years in turbo tax and end up with the same answer. So the best answer to my own simple question (As you already paid taxes on foreign passive income in that country as a Resident, should you again have to pay tax on the same income in the USA because you declare global income?) : Yes you are paying tax twice, FIRST IN THE COUNTRY OF RESIDENCE AND YES AGAIN IN THE USA IF YOUR ITEMIZED DEDUCTION IS NOT GOING TO EXCEEED THAT SPECIFIED AMOUNT ($30K).....in other words, in that case, DEDUCTION OR TAX CREDIT WILL HAVE NO EFFECT. Added to this, TurboTax has a complicated 1116 data entry, which one to enter first (wages or interest income, or whichever is the higher amount etc.
