Foreign Income Tax

Forum|Forum|3 years ago
January 30, 2023
2 replies
38 views

We have condo rental in Mexico. VRBO is now withholding income taxes on our rental income. Do we again pay income taxes again on top of that when we file our 2022 US Tax Return? If the answer is no, then do I exclude that income on business portion of our taxes?

TurboTax Home & Biz Windows

Best answer by ErnieS0

Yes. You do have to pay U.S. income tax on a condo rental in Mexico. U.S. citizens and resident aliens are taxed on worldwide income.

Set up your condo in TurboTax as a rental (TurboTax can handle foreign rentals). Enter your income and expenses.

You can also claim a credit for tax paid to Mexico.

To claim the foreign tax credit:

Type foreign tax credit in Search in the upper right (magnifying glass)
Select Jump to foreign tax credit
Complete the screens to claim either the credit or deduction

For more help:

Where do I enter the foreign tax credit (Form 1116) or deduction?

ErnieS0Answer

Level 15

Yes. You do have to pay U.S. income tax on a condo rental in Mexico. U.S. citizens and resident aliens are taxed on worldwide income.

Set up your condo in TurboTax as a rental (TurboTax can handle foreign rentals). Enter your income and expenses.

You can also claim a credit for tax paid to Mexico.

To claim the foreign tax credit:

Type foreign tax credit in Search in the upper right (magnifying glass)
Select Jump to foreign tax credit
Complete the screens to claim either the credit or deduction

For more help:

Where do I enter the foreign tax credit (Form 1116) or deduction?

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HardawaybrazilAuthor

Level 2

Thank you for the credit tip. We have always claimed our income, but this is the first year Mexico has taxed our income, so we did not know how to apply that to our US tax.