@dstautz1 agreeing with my colleague @Mike9241 on the path forward i.e. try to use the safe harbor ( the non-form 1116 and its limitations ), just wanted to add that TurboTax uses a quite fair but complicated method of US tax allocation between the domestic and the foreign source incomes. It uses the taxable income ratio --- for each income source it allocates the deductions applicable to that income. Thus if you use itemized deduction, Turbo allocates itemized deduction to the world income and to each of the foreign source incomes based on a ratio foreign source income to world income and then uses the resultant "adjusted gross income " for each source to world income AGI ( line 11 of form 1040 ) to allocate the US tax to each income source. It is this tax that is eligible for foreign tax credit ( i.e. the lesser of Foreign tax paid and this allocated US tax ).
I am aware that for most tax payers this detail is immaterial but if one is interested in the actual mechanics of ....
