How to tax US citizens overseas capital gain

[taoshu]

US citizens buy and sell property overseas

[JotikaT2]

U.S. citizens are taxed on all income, even if it is from a foreign country.

If you purchased an investment overseas and sold it during the year, you will need to report it in TurboTax in the applicable income section of the program.

If you had to pay foreign taxes within the country you are residing in, you can claim a foreign tax credit when preparing your tax return for the amount of the taxes paid to the foreign government.

On a side note, if you have foreign assets, you may have additional filing requirements depending upon the value of the assets.  Form 8938 is only required to be filed if you own a foreign financial asset that is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year; and the FBAR report is only required if you had a foreign bank account with values exceeding $10,000 during the year.  Please see the following links for more details.

How do I file Form 8938, Statement of Specified Foreign Financial Assets?

How do I file an FBAR report?  

[pk]

@taoshu , agreeing with my colleague @JotikaT2 , and recognizing that you have not provided  any  information about  what type of capital asset ,  how long held and indeed which country your asset is located in ,  the  US tax treatment of  capital assets  is  the same  irrespective where the asset is located.  Thus you report the transaction  as if the asset was located in the USA.

The foreign taxing authority may have a  different  way of computing the capital gain  but US does  its taxation  and computations under  its rules.    So US purposes you report the gain computation  as if the asset was in the USA.

If the foreign taxing authority  taxes this gain ( computed under its own rules ), then  that  income tax  generally is eligible for  "foreigtn Tax Credit/ deduction" to the extent allowed by US laws.   Note this  credit/ deduction is intended to ameliorate the effects of double taxation ( by both US and the Foreign Taxing authority ).  However, this applies only to the  federal taxes -- states generally do not recognize  tax treaties between US and the foreign taxing  authorities.

As @JotikaT2  has explained  the  FBAR  ( FinCen.gov form 114 )  and  FATCA ( form 8938 with your return ) are two additional  regulations that may come into  view  for foreign  financial assets  ( not real estate ).

Is there more one of us can do for you ?