I am a US citizen, resident in Canada. I entered my US interest and dividends from 1099s into Turbotax. Then I filled out the Foreign Tax Credit / Form 1116 for "re-sourced income by treaty" with the total of the 1099s and my taxes paid to Canada. (I also filled out separate Form 1116s for Canadian wages and interest.)
There is a US-Canada tax treaty allowing re-sourcing of US interest and US dividends to avoid double taxation. My understanding is that the tax on US interest is owed first to Canada, but the US taxes 15% of my US dividends first and then Canada taxes it after. Yet Turbotax calculates that I owe $0 to the US based on the taxes paid to Canada. Is there a setting in Form 1116 or elsewhere that I'm missing that would calculate the US tax owed correctly?
Thank you.