Double Taxation Treaty

[Daisy 0]

Taxes!!!

We live in California but have retained our house in England. We let it out.

Attempting to work the revenue returns ourselves. We have declared the un-earned income from the UK rental in our US return and paid the tax. We are now finalising the UK tax return and again declaring the income.

My eyes are crossed from reading so many Revenue downloads. Im stumped as to who we actually claim back the double payment of tax from. Is it the UK or US? Does the UK issue some type of receipt that we are able to include in our next tax return here in the US and offset the tax?

Any takers? Is anyone in a similar situation or does anyone know of a site where I can find info re non-resident landlords?

Thank you in anticipation!

daisy

[Lansbury 19]

I have income in the UK a pension from my job over there. As it is a government pension the UK insist they tax it.

For my US tax return I just claim the foreign income tax exemption which is $80,000 per year, so it doesn't even come into the US tax equation.

We went to a tax accountant for our first US tax return and that was the way they did it, as the exemption also then gets carried over to our States income tax.

Not sure why you are paying tax to both. If you are completing a UK tax return and have paid tax on the income in the US do you not claim the exemption from tax on the UK form and money does not change hands.

In the US the foreign tax exemption is claimed on a seperate form submitted with your US tax return.

[payxibka 10,044]

The exemption from double taxation is available on your US return. You can always amend your US return

[Daisy 0]

Thanks guys.

We have claimed my earned income within the $80k exemption but were advised that rent is un-earned income and therefore outside of the $80k earned income exemption. Hence declared and taxed separately in US.

Treated as taxable in the UK too, cos the UK revenue says so! As mentioned, Ive done so much reading my eyes are popping!!!!

Once these first couple of bitty years of returns are out of the way Im sure they will all fall into a pattern. This is the first year of me living in the US but still falling into UK resident catagory.

As the tax years do not run concurrently I can see it makes sense for us to adjust on next years US return. Happy to hear from anyone else in same boat!

Thank you.

daisy

[Lansbury 19]

US tax forms are quite complicated and for the small amount a tax accountant charges, ours normally charges $170, I think it is well worth it to avoid the hassle you are having. It certainly saved us a lot of messing around this year, we spent about 30 minutes explaining all our various income from 2 different countries to him and a week later went back and signed all the forms.

We'll certainly do it that way again next year.

[rebeccajo 14]

Rent is unearned income? *scratches head* I mean, maybe that's so but it doesn't sound logical.

I'm agreeing with the others that you need a 'pro'. Even if it's only for this first time. You might be able to get the hang of it after the first year - if you are able to keep up with any law changes.

[Boiler 43,426]

Rent is unearned income? *scratches head* I mean, maybe that's so but it doesn't sound logical.

I'm agreeing with the others that you need a 'pro'. Even if it's only for this first time. You might be able to get the hang of it after the first year - if you are able to keep up with any law changes.

Depends on the numbers, but you might not have much tax to pay in the UK once you have taken into account your personal allowance, write offs etc.

However as you know US taxes you on your worldwide income, so assuming that your US Income takes care of your US allowances, then it will all be taxable and the UK tax offset will be marginable.

There is also a limitation as to how much overseas tax you can offset, not sure if I can explain it, cheated and did it on line through taxact.

A US Tax advisor may know about the US system, you will go a long way to find somebody who knows both, and it will cost you.

[Lansbury 19]

A US Tax advisor may know about the US system, you will go a long way to find somebody who knows both, and it will cost you.

That isn't necessarily so. We went to the local guy our son uses and he said having an overseas income wasn't much extra work and it wasn't a problem for him to look up the information he needed. We knew what his normal charge was from what our son paid and ours was an extra $50. Well worth it to have someone who understands thier way around the forms sort the first one out.

As ours will be a bit different again for this year, we will not be able to claim the foreign income exemption, just the double tax we will have him do that as well. Hopefully when we have seen one done properly we will do our own from then on, but the fee to have it done hassle free and the instructional value are well worth it IMHO.

[Daisy 0]

Thank you so much to all responding!

We live in a small town way out in the boonies. The local professionals did not come across as informative with regard to UK income and what to do with it when we were doing our US taxes, earlier in the year. The experience did not inspire us with confidence so we decided to use turbotax and a mirriad of IRS helpsheets. It turned out well and correct.

We are not too worried about paying for the advice as we are able to write off the fee. It is more a case of finding an experienced pro that really knows what they are talking about. We were just unlucky. Understandable as it does get complicated.

(I am not kidding when I say we live in a SMALL town the careers advisor at the local college asked if my accent was Australian, and when I responded 'no Im from England' she went on to say: 'Oh yes, Ive been to Italy!!!' Bless her!)

I guess we will need to head into LA for an expert if necessary.

Thanks again.

daisy

[John & Annie 0]

Thank you so much to all responding!

We live in a small town way out in the boonies. The local professionals did not come across as informative with regard to UK income and what to do with it when we were doing our US taxes, earlier in the year. The experience did not inspire us with confidence so we decided to use turbotax and a mirriad of IRS helpsheets. It turned out well and correct.

We are not too worried about paying for the advice as we are able to write off the fee. It is more a case of finding an experienced pro that really knows what they are talking about. We were just unlucky. Understandable as it does get complicated.

(I am not kidding when I say we live in a SMALL town the careers advisor at the local college asked if my accent was Australian, and when I responded 'no Im from England' she went on to say: 'Oh yes, Ive been to Italy!!!' Bless her!)

I guess we will need to head into LA for an expert if necessary.

Thanks again.

daisy

Where do you live?

[Daisy 0]

We live to the east of the Sierra Nevadas, in the high desert along the 395 between LA and Mammoth. Its an amazingly beautiful part of the world. Apart from when you need to shop or consult a tax advisor!!! Our closest mall is a 3 hour return drive.

The people do make up for it though, those I have met have been warm and very friendly. Slow, slow pace of life. Reminds me so much of Mayo, Ireland. Apart from the weather! Like going back in time.

daisy

[John & Annie 0]

We live to the east of the Sierra Nevadas, in the high desert along the 395 between LA and Mammoth. Its an amazingly beautiful part of the world. Apart from when you need to shop or consult a tax advisor!!! Our closest mall is a 3 hour return drive.

The people do make up for it though, those I have met have been warm and very friendly. Slow, slow pace of life. Reminds me so much of Mayo, Ireland. Apart from the weather! Like going back in time.

daisy

What about Palmdale/Lancaster ?

[Boiler 43,426]

A US Tax advisor may know about the US system, you will go a long way to find somebody who knows both, and it will cost you.

That isn't necessarily so. We went to the local guy our son uses and he said having an overseas income wasn't much extra work and it wasn't a problem for him to look up the information he needed. We knew what his normal charge was from what our son paid and ours was an extra $50. Well worth it to have someone who understands thier way around the forms sort the first one out.

As ours will be a bit different again for this year, we will not be able to claim the foreign income exemption, just the double tax we will have him do that as well. Hopefully when we have seen one done properly we will do our own from then on, but the fee to have it done hassle free and the instructional value are well worth it IMHO.

Somebody who knows IRS and Inland Revenue.

[Lansbury 19]

A US Tax advisor may know about the US system, you will go a long way to find somebody who knows both, and it will cost you.

That isn't necessarily so. We went to the local guy our son uses and he said having an overseas income wasn't much extra work and it wasn't a problem for him to look up the information he needed. We knew what his normal charge was from what our son paid and ours was an extra $50. Well worth it to have someone who understands thier way around the forms sort the first one out.

As ours will be a bit different again for this year, we will not be able to claim the foreign income exemption, just the double tax we will have him do that as well. Hopefully when we have seen one done properly we will do our own from then on, but the fee to have it done hassle free and the instructional value are well worth it IMHO.

Somebody who knows IRS and Inland Revenue.

Yes both it was no problem at all.

[Boiler 43,426]

A US Tax advisor may know about the US system, you will go a long way to find somebody who knows both, and it will cost you.

That isn't necessarily so. We went to the local guy our son uses and he said having an overseas income wasn't much extra work and it wasn't a problem for him to look up the information he needed. We knew what his normal charge was from what our son paid and ours was an extra $50. Well worth it to have someone who understands thier way around the forms sort the first one out.

As ours will be a bit different again for this year, we will not be able to claim the foreign income exemption, just the double tax we will have him do that as well. Hopefully when we have seen one done properly we will do our own from then on, but the fee to have it done hassle free and the instructional value are well worth it IMHO.

Somebody who knows IRS and Inland Revenue.

Yes both it was no problem at all.

Post their details, whe I was looking there was one possibility in the whole of Colorada, I think they charged $100 an hour, could have been more.

My Wife used Price Waterhouse in the UK, they took forever, fortunately the Company was paying. And hers were not that complicated, just salary.

My Brother is an Accountant, asked him if he knew of anyone who did both, nope.