Hello Everyone,
Could you please help on below questions regarding US-China Tax Treaty article 6 and article 22?
My friend is resident alien, she has a rental property in China, she already paid property tax and rental income tax in China.
If she paid $300 income tax to China, however based on 1040 Schedule E, the income tax for this rental property to US is $800 [Maybe because of different tax benefits or different tax rate or different calculation], does she have to pay the difference $500 to US? I understand that she can take foreign tax credit, and how much of the foreign tax credit she can use for this rental property?
According to US-China Tax Treaty article 6 and article 22, not sure which way is correct, she only needs to report this tax and doesn't need to pay extra $500, or she need report this tax and, in the meantime, she has to pay extra $500 to US?
Also above is an example based on she has the tax invoice from China tax bureau, and in the previous years, individual who owns real property which rented out, China tax bureau only charged fees instead of tax and no invoices or receipts she can find, how can she report?
Thank you very much. Have a great day.
