Credits for foreign taxes paid: in my situation, we paid taxes on US-sourced interest, dividends, capital gains, and SS distributions. How do I claim a credit for those?

[pdxkelly]

Spain taxed us on the US-sourced income in these areas. We want to claim a credit for those taxes paid since we also paid US taxes on the same. There is no double taxation, but cannot figure out how to do this in TT. It seems to take me in circles and none of it makes sense. Appreciate the help!!

[MaryK4]

You have U.S.-sourced income (from U.S. banks/stocks/government), and you are trying to claim a credit for taxes paid to Spain.  You must use the special provision in the U.S.–Spain tax treaty known as "Re-sourcing of Income by Treaty." You must tell TurboTax that you are legally treating this U.S. income as "Spain-sourced" solely for the purpose of this calculation, allowing you to pair the Spanish tax with the income it taxed.

1. In your TurboTax return, go to Deductions & Credits > Estimates and Other Taxes Paid.
2. Start or revisit Foreign Tax Credit.
3. Continue through the initial questions until you reach a screen that asks, "Tell Us About Your Foreign Taxes."
4. You must select the option: "None of these apply" or "I have other foreign taxes to report."
5. Proceed through the screens until TurboTax asks for the type of income.
6. Select "Income Re-sourced by Treaty."
7. Select Spain as the country.  Enter the total combined USD amount of the U.S.-sourced income that Spain taxed you on (Interest + Dividends + Capital Gains + Social Security).  Note: You are not double-reporting income. You are simply re-classifying income that was already entered elsewhere (like on 1099-DIV or SSA-1099) for this specific worksheet.
8. Enter the total USD amount of Spanish income tax you paid on that specific income.

[Mike9241]

there is a tax treaty between Spain and the US.In some case double taxation can be completely avoided. I don't think TurboTax is capable of helping you deal with the tax treaty. You may need to seek the help of a pro familiar with the treaty because you get no credit if the income is not taxed by both countries. 

https://www.irs.gov/pub/irs-trty/spain.pdf