RE: . You can take the foreign taxes paid to another Government as a direct credit against US taxes.
What about interest on deposits in foreign banks? Are they credited against US taxes?
Say I have a the equivalent of millions of dollars deposited in a bank in Singapore earning interest ( this, plus the appreciation of the Singapore currency, say amounts to $40,000 interest ). Singaporeans tell me that foreign bank account holders are not taxed in Singapore.
If I declared that interest as income in the USA, wouldn’t the ENTIRE $40,000 be taxable in the US?
Interest is taxable as income, thus included. It would depend on the overall income vs taxation. If you lived in a country (Bahamas) without income taxes, that credit would be zero and you would only have your exemption.