where do i deduct tax paid to italy on usa interest income since i am resident in italy but a usa citizen?

Forum|Forum|1 year ago
February 24, 2025
1 reply
0 views

...in 2024 I moved to Italy and became an Italian and because I reside in Italy and pay tax on worldwide income, including USA bank interest income, where do I show the tax credit (treaty related, as I have no foreign income as it relates to the USA) on my USA tax return in 2024?

KrisD15

First, enter your income.

Next, go to

Deductions & Credits
Estimates and Other Taxes Paid
Foreign Taxes START or UPDATE

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

gbrielAuthor

Do you mean "Foreign Tax Credits"?

The issue is I ONLY have Canada and USA interest income reported on my USA tax return for 2024, BUT I moved to Italy in 2024 and am now a tax resident there and have to pay tax on my worldwide income to Italy and thus don't want to pay tax on that same income to the USA in 2024. In other words, my interest income is NOT "foreign sourced" and that is why I am confused as to how to go about getting the applicable tax credit on my USA tax return since Italy will have first taxing rights to that USA/Canada interest income. I have NO other income at all in any country to report in 2024!

gbrielAuthor

I could go thru the Wages & Income section and where I have entered all of my 1099's showing the interest income earned in 2024 from my Canadian and USA bank sources and ADD a Foreign Taxes paid amount on each 1099 representing the actual tax that I will have to pay in Italy re 2024, but that isn't technically true re that box not being filled in on the respective 1099. It also isn't true that the interest was EARNED in Italy, as it was sourced in the USA and Canada. I could then go thru the Foreign Tax Credits section under Deductions and pick up the foreign tax entered on each 1099 to essentially then ensure I'd get the tax credit and pay no USA tax on those Canada and USA sourced interest amounts that are instead being taxed in Italy because I was tax resident there in 2024. I know I won't owe USA tax on these interest earned amounts, but I cannot figure out how to best use turbotax and what the relevant sections are in your program to best reflect all of this!