How to avoid paying tax in US as well as in UK, on rental income in UK?

[debrooze]

I am not a realtor anywhere. I have a salaried job in US - I pay tax on that through HR. My only complication is this rental income in UK. So can I use turbotax to declare the rental income AND not pay tax in US.

[Critter-3]

No you MUST  pay taxes on the rental income if there is a profit.  On the US income tax return you MUST report total worldwide income  and you cannot exempt it either.  

[rjs · Accepted solution]

If you pay U.K. tax on the rental income you might be able to claim the foreign tax credit on your U.S. tax return to reduce or eliminate the double taxation. Also, there is a tax treaty between the U.S. and the U.K. that might have a provision to reduce or eliminate the double taxation. This is a very specialized area of tax law. I assume that you live in the U.S., since you said that you have a salaried job in the U.S. You should find a local tax professional who specializes in U.S.-U.K. taxation. The tax pro will be able to look at the details of your situation and tell you how you can avoid paying tax to both countries on the same income.

[debrooze]

I intend to pay what I must and not anything else. I will do it all properly.
My deal is that I pay tax in UK on this income and US-UK have a double taxation agreement. Therefore I believe there is a way to only l pay it in one country. I have already paid this year in UK. It follows that I am looking for the correct administration to exempt it in US. Can you advise? Do you have thorough understanding of this area? Thank you.

[debrooze]

Do you think the tax experts at intuit/turbo tax will be expert enough to help with this?

[rjs]

@debrooze 

I don't think you will find the expert knowledge that you need at Intuit or here in this online community. That's why I recommend finding a tax professional who specializes in this area.

Please note that when you reply to someone's post, there is no indication of who you are replying to unless you specify in your reply.

[Mike9241]

For the best advice see a tax pro familiar with US-UK taxation

here's a link to the tax treaty and technical explanation.

https://home.treasury.gov/system/files/131/Treaty-UK-7-24-2001.pdf https://home.treasury.gov/system/files/131/Treaty-UK-Protocol-TE-7-22-2002.pdf 

you may want to read Article 24 starting on page 95 in the technical explanation.

I'm not an expert in US-UK taxation but it would seem the income would be reported on your US tax return and you would claim a foreign tax credit.