I am a US citizen retired and living in Portugal. I make a living investing in US stocks. I report this income to both the US and Portuguese IRS and pay taxes on both ends. Could someone tell me how I can avoid this double taxation?
I looked at the foreign tax credit (form 1116). https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit-choosing-to-take-credit-or-deduction
However, the instructions for 1116 specifically state this: "The foreign tax credit can only reduce U.S. taxes on foreign source income; it cannot reduce U.S. taxes on U.S. source income."
And I am not aware of any place on my Portuguese tax return where I can avoid double taxation by indicating that I have already paid $xxx to Uncle Sam.