On April this year , I got $49,000 in El Salvador, Central America. This was from the sale of a property, that I inherited , many years ago. I deposited the money on a local bank, and because I'm a resident of the USA; I had to filled up a W-9 form. The money as I mentioned is in El Salvador.
How will this affect me for 2023 Taxes.
Please advice me
Thanks
Rafel
Then generally speaking, you are taxed on worldwide income, including the El Salvador income. However, you may also qualify for a Foreign Tax Credit. This IRS FAQ may provide further helpful information.
Unfortunately, there is not a simple answer to that question. The US tax system is a progressive one, not a flat rate. Additionally, many other factors come into play, such as deductions. You may find our free Taxcaster tool to be helpful in estimating your tax liability. Hope this helps!
Hello! Rafel,
The income you received from the sale of inherited property is taxable as capital gain or loss and should be reported on your US Form 1040 in the year of the sale, as US citizens are taxed on their worldwide income. Even though you inherited the property, the sale of it makes it reportable and potentially taxable if there is any gain on the property.
You mentioned you received $49,000 from the sale, but you will only be taxed on the amount of gain you realized from the sale, that is $49,000 - the FMV on the Date of Death of the decedent. As a US citizen, you get the same step up in basis as you would if you inherited property in the US.
The money you have deposited in the foreign bank also has a reporting requirement. You will need to file a Form 114 reporting this account and its holdings. This is a report separate from your tax return is filed with with a division of the US Treasury. You can can do that here: https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html
The above information is just the basic requirements. You might want to consult a tax advisor who can give you specifics.
Hi, @rafavila ! Are you a US citizen? A resident alien? Or neither of the above?
Then generally speaking, you are taxed on worldwide income, including the El Salvador income. However, you may also qualify for a Foreign Tax Credit. This IRS FAQ may provide further helpful information.
Unfortunately, there is not a simple answer to that question. The US tax system is a progressive one, not a flat rate. Additionally, many other factors come into play, such as deductions. You may find our free Taxcaster tool to be helpful in estimating your tax liability. Hope this helps!
Hello! Rafel,
The income you received from the sale of inherited property is taxable as capital gain or loss and should be reported on your US Form 1040 in the year of the sale, as US citizens are taxed on their worldwide income. Even though you inherited the property, the sale of it makes it reportable and potentially taxable if there is any gain on the property.
You mentioned you received $49,000 from the sale, but you will only be taxed on the amount of gain you realized from the sale, that is $49,000 - the FMV on the Date of Death of the decedent. As a US citizen, you get the same step up in basis as you would if you inherited property in the US.
The money you have deposited in the foreign bank also has a reporting requirement. You will need to file a Form 114 reporting this account and its holdings. This is a report separate from your tax return is filed with with a division of the US Treasury. You can can do that here: https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html
The above information is just the basic requirements. You might want to consult a tax advisor who can give you specifics.