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Robocop2020
Level 3

Foreign tax credits

quick questions - if I am claiming foreign tax credit for foreign rental property - that is to fill in schedule e with the depreciation (fmv estimate based on inheritance) , calculate the US  tax and claim the foreign tax credit  - do I need to have these documents translated in English? I have the originals, translated in US per the IRS rules ect, but the actual documents. I hope not. Let me know.

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pk
Level 12
Level 12

Foreign tax credits

@Robocop2020 , assuming that you are US citizen/Resident ( Green Card)/ Resident for tax purposes,  

 

(a) yes you need to recognize the rental income  and expenses on Schedule-E and  in US$ converted using dollar of the day or published average rates etc.

(b) generally will not ask for proof of the  income, expenses or  Depreciable Basis of the asset,  however it would be good idea to have proof  ( in English ) of the FMV at the time of passing of the decedent -- because this will  be needed when you dispose of the property ( for gain/ loss computation ).   IRS does publish  many of its  documents / pubs in many languages  ( and  therefore  have access  to people who can read/understand  quite a few languages,   but it is best  that you have translation done ( just in case ).

(c) Foreign  taxes paid  that are eligible for  tax credit  are  generally  income taxes on the income.  If the  taxes that you paid  are not based on gross/net income then they may need to be treated differently.  Which country are you talking about ? -- there may be treaty conditions that apply

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1 Reply
pk
Level 12
Level 12

Foreign tax credits

@Robocop2020 , assuming that you are US citizen/Resident ( Green Card)/ Resident for tax purposes,  

 

(a) yes you need to recognize the rental income  and expenses on Schedule-E and  in US$ converted using dollar of the day or published average rates etc.

(b) generally will not ask for proof of the  income, expenses or  Depreciable Basis of the asset,  however it would be good idea to have proof  ( in English ) of the FMV at the time of passing of the decedent -- because this will  be needed when you dispose of the property ( for gain/ loss computation ).   IRS does publish  many of its  documents / pubs in many languages  ( and  therefore  have access  to people who can read/understand  quite a few languages,   but it is best  that you have translation done ( just in case ).

(c) Foreign  taxes paid  that are eligible for  tax credit  are  generally  income taxes on the income.  If the  taxes that you paid  are not based on gross/net income then they may need to be treated differently.  Which country are you talking about ? -- there may be treaty conditions that apply

View solution in original post

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