I own a foreign property (house) and parents live in it. How do I claim for interest and depreciation from this year on ?

[Vish_GKA]

Hi, I am a resident alien for the last 3yrs and I have a foreign property (own house - single family home, not an apartment) in which my parents have been living for the last 10yrs or so (renting). That's my second home as primary is in US and has no mortgage. I missed filing/declaring that foreign prop and claiming income & depreciation in the last 3yrs since I got the green card. I planning to streamline it going forward.

Given this situation, my questions are -

- How do I start it now and cover the last 3yrs? what all info is required ? Or can I only do last year ?

- In which section of IRS would I file it in Turbo tax? What additional forms are needed to submitted ?

- Are there any proofs to be submitted like monthly rental income receipts (or bank statements) with tax filing ?

- Do I have to notarize any of those proofs before submitting ? 

- Does Turbo tax Premier suffice to do this ?

Appreciate some guidance on this.. 

[DaveF1006]

To clarify, are your parents renting the home from you and you receive income from them?

[Vish_GKA]

YES, they are ! 

[DaveF1006]

To clarify further, did you file a return for years 2021 & 2022?

[Vish_GKA]

Yes, I filed my returns but forgot to report the foreign property details and depreciation..

[pk]

@Vish_GKA , Having read through your post and the rep[l;ies/ questions from my colleague @DaveF1006 , I am still confused what you are trying to do.  Generally , I would have assumed that your ;parents live in your  foreign ( India ? ) property and pay very little  -- not the standard  fair market rent.  If that is the case then you cannot claim this as income property.   Therefore I need to understand what you want to achieve --   pay taxes on income from that foreign property & take advantage of depreciation ?   Note that while depreciation helps you now reduce your tax burden,  when you sell the prop.  any gain  up to accumulated depreciation is taxed at your marginal rate AND not at capital gain.  Also your basis in the property is reduced  by  the accumulated  depreciation allowable  ( whether you took it or not ) , thus increasing your gain.   Do you really want to do this  considering that it is within the family.  

I will circle back once I hear from you 

pk

[Vish_GKA]

Hi pk -  Reducing the tax burden with foreign property depreciation is the goal. I understand what you are saying about the impact at the sale time. But my primary Q right now is how to claim the last couple of years that I didn't do and which section of forms in Turbotax to be used for that ?

Thanks !

[DaveF1006]

You need to amend your 2021-2022 tax returns. If you filed with Turbo Tax in 2021-2022, here is how to amend.

To amend your return using Turbo Tax Online.

1. Log into Turbo Tax
2. Select Scroll down Your tax returns & documents in your landing page.
3. Select Amend (change) 2021 return. 
4. After you prepared your 2022 amendment, repeat the process for 2022.
    

To amend using the Desktop Software, go to:

1. Federal Taxes
2. Other Tax Situations>other tax forms
3. Amend a return
4. You would need both the 2021-2022 software still installed on your computer to prepare the amendment.

Once you begin the amendment process, go to:

1. In TurboTax, go to 
2. federal
3. Wages and income 
4. Rentals, Royalties, and Farm>
5. Rental Properties and Royalties (Sch E)>start or revisit
6. Answer Yes to the question Did you have any rental or royalty income and expenses in year XXXX for property you own?
7. Follow the on-screen instructions as you proceed through the rental and royalties section.
   • We'll ask you to enter general information about your rental (like description, address, and ownership percentage)
   • You will eventually reach a screen that says Do Any of These Situations Apply to This Property? here is where you indicate you sold the property. Then you will enter information about how long it was rented .
   • Eventually, you'll come to the Rental Summary screen, which is where you enter your rental income and expenses, assets and depreciation, and vehicle expenses.
8. TurboTax, go to federal>wages and income>see all income>Rentals, Royalties, and Farm>Rental Properties and Royalties (Sch E)>start or revisit
9. Answer Yes to the question Did you have any rental or royalty income and expenses in XXXX for property you own?
10. Follow the on-screen instructions as you proceed through the rental and royalties section.
    • We'll ask you to enter general information about your rental (like description, address, and ownership percentage)
    • Eventually, you'll come to the Rental Summary screen, which is where you enter your rental income and expenses, assets and depreciation, and vehicle expenses.
    • When you get to the rental summary screen, go to asset/depreciation.  This is where you enter you year you bought the property and amount paid.  This will automatically calculate the amount of depreciation taken in prior years
    • If the amount calculated is different from your totals, you have the option of revising the amount.  
11. Now open Turbo tax if it is not already opened
12. Go to federal>income and expenses>rental properties and royalties>Rental Properties and Royalties (Sch E)
13. What are you here to report? Royalty 
14. Then it will ask information where this royalty is located. You may have entered this already but if you haven't, this may be useful.
15. Then answer the next few questions when it asks more information about your royalty.
16. I know you asked earlier about a question that asked if you were a partial owner. Here you will say no if all of the income on the 1099-MISC is your income.
17. Once the profile is complete, it will ask about your income. Here is where the 1099-MISC information is entered. If this is the path you followed before, then forgive me for listing this. I just wish to make sure you do this 100% correctly.
18. Keep continuing in the return.  You are not done yet.
19. After an explanation on the difference between assets and expenses, you can begin listing your expenses regarding taxes or products.  
20. As you scroll through expenses, taxes are at top of the list. All property taxes will be listed here.
21. As you scroll through remaining expenses, if there is a particular category not listed here, at the bottom of the form is miscellaneous expenses. You could list these here with a brief explanation.

Once done, all forms should complete along with 1040 X, which is already generated in your return.

[DaveF1006]

You need to amend your 2021-2022 tax returns. If you filed with Turbo Tax in 2021-2022, here is how to amend.

To amend your return using Turbo Tax Online.

1. Log into Turbo Tax
2. Select Scroll down Your tax returns & documents in your landing page.
3. Select Amend (change) 2021 return. 
4. After you prepared your 2022 amendment, repeat the process for 2022.
    

To amend using the Desktop Software, go to:

1. Federal Taxes
2. Other Tax Situations>other tax forms
3. Amend a return
4. You would need both the 2021-2022 software still installed on your computer to prepare the amendment.

Once you begin the amendment process, go to:

1. In TurboTax, go to 
2. federal
3. Wages and income 
4. Rentals, Royalties, and Farm>
5. Rental Properties and Royalties (Sch E)>start or revisit
6. Answer Yes to the question Did you have any rental or royalty income and expenses in year XXXX for property you own?
7. Follow the on-screen instructions as you proceed through the rental and royalties section.
   • We'll ask you to enter general information about your rental (like description, address, and ownership percentage)
   • You will eventually reach a screen that says Do Any of These Situations Apply to This Property? here is where you indicate you sold the property. Then you will enter information about how long it was rented .
   • Eventually, you'll come to the Rental Summary screen, which is where you enter your rental income and expenses, assets and depreciation, and vehicle expenses.
8. TurboTax, go to federal>wages and income>see all income>Rentals, Royalties, and Farm>Rental Properties and Royalties (Sch E)>start or revisit
9. Answer Yes to the question Did you have any rental or royalty income and expenses in XXXX for property you own?
10. Follow the on-screen instructions as you proceed through the rental and royalties section.
    • We'll ask you to enter general information about your rental (like description, address, and ownership percentage)
    • Eventually, you'll come to the Rental Summary screen, which is where you enter your rental income and expenses, assets and depreciation, and vehicle expenses.
    • When you get to the rental summary screen, go to asset/depreciation.  This is where you enter you year you bought the property and amount paid.  This will automatically calculate the amount of depreciation taken in prior years
    • If the amount calculated is different from your totals, you have the option of revising the amount.  
11. Now open Turbo tax if it is not already opened
12. Go to federal>income and expenses>rental properties and royalties>Rental Properties and Royalties (Sch E)
13. What are you here to report? Royalty 
14. Then it will ask information where this royalty is located. You may have entered this already but if you haven't, this may be useful.
15. Then answer the next few questions when it asks more information about your royalty.
16. I know you asked earlier about a question that asked if you were a partial owner. Here you will say no if all of the income on the 1099-MISC is your income.
17. Once the profile is complete, it will ask about your income. Here is where the 1099-MISC information is entered. If this is the path you followed before, then forgive me for listing this. I just wish to make sure you do this 100% correctly.
18. Keep continuing in the return.  You are not done yet.
19. After an explanation on the difference between assets and expenses, you can begin listing your expenses regarding taxes or products.  
20. As you scroll through expenses, taxes are at top of the list. All property taxes will be listed here.
21. As you scroll through remaining expenses, if there is a particular category not listed here, at the bottom of the form is miscellaneous expenses. You could list these here with a brief explanation.

Once done, all forms should complete along with 1040 X, which is already generated in your return.

[DaveF1006]

You need to amend your 2021-2022 tax returns. If you filed with Turbo Tax in 2021-2022, here is how to amend.

To amend your return using Turbo Tax Online.

1. Log into Turbo Tax
2. Select Scroll down Your tax returns & documents in your landing page.
3. Select Amend (change) 2021 return. 
4. After you prepared your 2022 amendment, repeat the process for 2022.
    

To amend using the Desktop Software, go to:

1. Federal Taxes
2. Other Tax Situations>other tax forms
3. Amend a return
4. You would need both the 2021-2022 software still installed on your computer to prepare the amendment.

Once you begin the amendment process, enter your rental house information here.

1. In TurboTax, go to 
2. federal
3. Wages and income 
4. Rentals, Royalties, and Farm>
5. Rental Properties and Royalties (Sch E)>start or revisit