Your broker, mutual fund or the U.S. agent for a foreign security should supply tax information and guidance. If they don't, the investment should probably be shunned. If you buy individual stocks, ask the brokerage firm exactly what it will do for you. You generally save more by using a credit, which is subtracted from the actual tax, than with a deduction, which reduces taxable income. But your credit may be restricted, and if it exceeds a certain amount, you'll probably need expert help to prepare federal Form 1116 to claim it.
Most countries require companies to withhold tax from dividends sent overseas.
Happily, fewer foreign countries tax interest income and capital gains. A claim requires certification by a U.S. bank or the IRS that the applicant is a U.S. resident. In addition to the reduced rate, a successful claim also qualifies the U.S. investor for France's little-known avoir fiscal. Where the Treaties Are The U.S.'s tax-treaty partners include Canada, Mexico, most European nations, Russia, Japan, China, South Korea, India, Pakistan, the Philippines, Indonesia, Australia, Israel and Egypt. Treaties with Turkey, Thailand and South Africa are moving toward completion.