Tried asking about the Canadian sourced bank interest income and you responded, but respectfully I don’t think with the understanding that I pay NO tax to Canada at all (Canadian born and citizen, but have not resided in Canada since 1990 when I moved to the USA and later became a USA citizen…Canada, as opposed to the USA, taxes based upon residency only and even Canadian citizens have no income tax or filing related obligations if they no longer reside there). Now living in Italy as a citizen there as well, I have to pay tax on my worldwide income (which in 2024 is just interest income earned in Canada and the USA). In order to avoid USA tax on that same interest income, I have to use FTC’s of course. Re-sourcing the USA sourced interest income under tax treaty as if it were sourced in Italy will allow me to use a FTC on the USA return. Do I also re-source the Canadian interest income as if it were sourced in Italy since I pay no tax to Canada on it and have always paid USA tax on my Canadian sourced bank interest income? I am a bit confused in that if I separate the Canadian sourced interest income on Form 1116 and call that “passive income” instead of “re-sourced income”, I would not be able to report any foreign tax on that same interest income paid to Canada. Logically, I don’t believe I have to pay tax on the Canada sourced bank interest income to BOTH Italy (starting in 2024 when I became a citizen and also a tax resident there) and the USA (always have paid USA tax on the converted Canadian interest income prior to 2024).
