1. Yes, foreign tax credit is what you will use on your tax return. You may also exclude foreign earned income. See About Form 2555, Foreign Earned Income
2. Only have US and Canada interest income reported. You need to add the rest.
Since you are a US citizen, you pay taxes on all income worldwide.
3. You moved to Italy and reside there.
You have two helpful items:
- take the foreign tax credit for all double taxed income. Both Canada and Italy will be named.
- the other is the US - Italy treaty
4. Taxing rights may be dictated by the treaty or both countries tax you. If both, one of them will give you a credit for the other. The tax credit is for the lower of the taxes on the same income. If Italy has a lower tax rate, you will owe the US.
5. Correctly enter your forms along with all foreign earned income and use the treaty and foreign tax credit when applicable.
Reference:
Instructions for Form 1040 states:
Income
Generally, you must report all income except income that is exempt from tax by law
[Edited 3/6/25 | 1:44 PST]
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