Deductions & credits

@pk 

Thank you for the support, this is extremely helpful. I will pose a series of follow-ups here. I have no expectation as this is already amazing, but will be very grateful for any responses. I trust more generally that if I make a good conscience effort to get this right, putting time into reading guidance, and am transparent on what I have entered and why, I should be okay.

1. This is almost certainly implicit to your reply but I wanted to make it explicit - from briefly browsing Schedule E, I don't think there is a separate section for 'foreign' incomes, so I want to clarify that I am entering this into what is a generic Schedule for which rental income is applicable. Or maybe did I miss a tick box somewhere? One idea I have is to write a note in the 'Type of Property' part to explain the status. (I appreciate that among other things, (i) I convert everything into USD; and (ii) as you go on to point out, I enter Foreign Tax Credit elsewhere);
2. Am I okay to choose whether to calculate my earnings and expenditure on the property based on invoicing or money flows (which I think is sometimes called ‘cash accounting’)?
3. Can I use the 2023 UK Pound exchange rate listed by the IRS for my conversion of payments? https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates I note that on the above page it states: “In general, use the exchange rate prevailing (i.e., the spot rate) when you receive, pay or accrue the item.” Perhaps I can add 5% to whatever the converted result is to be extremely confident as to not to under-report?
4. In terms of Foreign Tax Credit I have at least four  issues to resolve:
   1. The UK tax year runs from April 6 to April 5. Am I correct to assume that I need to run two calculations here: to calculate how much UK tax I incurred from this property in the period 1 Jan – 5 April and the same for April 6 – December 31? My subsequent three issues assume the answer to this is a yes;
   2. For both of those periods I may have the following to resolve. In the UK I *may* be benefitting from a UK tax free allowance for about 70% of my rental income. My idea would be to do this: (i) assume that this allowance is ‘used up’ over time through the first 70% (or whatever the precise figure) of the payments I receive over a UK tax year; (ii) then calculate tax on particular parts of my income based on the incidence as defined. In this case then this means that most all of my 1 Jan-5 April income (from the UK 2022-2023 year) will have been fully taxed; most of the 6 April – 31 Dec income (from the UK 2023-2024 year) will have been untaxed (and this latter will give me more or less no tax credit, which is fine)
   3. Depending on the above answer, I may have an issue with my 1 Jan – 5 April items: I have currently paid a flat rate of tax for that year (in the UK), but expect to be making a refund claim to the UK authorities. This will not happen prior to 15 April though. If this were to be material I would suggest that I simply make the smaller claim of the two
   4. Again, depending on the above I may have this different issue with the 6 April – 31 December portion. I have not yet done a tax return for that income, so have not paid any tax on this yet. Can I put tax I expect to pay on this? I would be extremely wary of doing this! If I don’t, can I retrospectively sort it out? (If it’s worth my while, which is unlikely, this is not much money)
5. Do I need to provide FBAR related documents/information? Can I do this with TurboTax? Any advice?
6. Do I need to offer up ‘an entity’ which I say owns the property. The reality is it is just me, I own this as a private individual.