What verstion of turbo tax and an forereign inheritance question

[CThunder]

this  is a multiple part questions, if i need to split it up into separate questions please let me know. Knew to this forum. So let me say hello first. Here are my questions and i will be happy to get the turbo tax expert help here:

 My father was from a foreign country and passed and let my and my brother as heirs and we split some money and and half ownership in an apartment in that country, brother is still living and citizen in the country while im USA citizen ( that country is germany)

1.  Someone is renting that apartment and that money is going into an account my brother has set up under his name, management fees are taking out for a management company that is managing it.  So far i am not actually receiving any of that money yet as we are still paying medical bills my father had from that account.

2. I have paid taxes to the german tax authorities for inheritance tax

question is what turbotax version do i need to add all of this to my taxes this year, do i need to claim #1, if i actually didn't receive any of the rent money yet? if so where and how do i claim it. Can i claim the tax money i had to pay the German tax authorities for the inheritance tax? if so where do i claim that? Can i claim any of the bills i had to pay for my fathers medical bills my brother and i split being it came out of the rent money we received?

thank for any help

[guywong]

Here are my "answers" off the top of my head.  

With respect to the bank account in Germany, even though you said it's only in your brother's name, I suspect you have a "constructive" ownership of the account.  In any event, I would act conservatively and report "Yes" at the bottom of your Form 1040, Schedule B on foreign bank account and file a Foreign Bank Account Report (FBAR) with FinCen electronically.  See https://fincen.gov/report-foreign-bank-and-financial-accounts

You may also need to file IRS Form 8938, Statement of Specified Foreign Financial Assets with your 1040.

If you received over $100K, you should also prepare a Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.

I don't believe inheritance tax paid to a foreign country would have any effect on your U.S. income taxes as it is not a foreign "income" tax.  So no foreign income tax credit.

I suggest you take a look at the U.S. - Germany Tax Treaty:

https://www.irs.gov/businesses/international-businesses/germany-tax-treaty-documents

Even though you didn't physically take any rent money from the bank account, you are still required to complete a Schedule E for the apartment rental.  I believe depreciation  for the overseas apartment is straight line over 40 years, but not 100% sure.  You should be able to use a step-up basis for depreciation purposes.  So it's important to get an appraisal as of your father's date of death.

I don't know much about the various versions of TurboTax.  I use their Home and Business version and that version should be able to complete your income tax return for you.

I don't believe you can claim your father's medical expenses.

[CThunder]

Thank you kindly for your responses , i will look at all the links. the hard thing about this is the aparment income and all that is supposed to be split between my brother and I, how do i show that on the forms. Say if he income is 900 Euros, and the managment company takes out 350 euros, that leavus us with 550. He supposed to get half and i get half, so that leaves me with 275 euros ( course i havent gotten any yet due to bills we had to pay) 

So do i put down 275 Euros in dollars? for the 4 months for this year? as the income? what paper work do i need to verify that? the bank statements from his account?

thank you for your help

[CThunder]

Perhaps let me ask this:

If i get the Turbox Tax help/Assistance? to help me fill out my taxes this year can they help me with this inheritance issues/paperwork? Do they have international law experts that will be able to help me walk through this and do the right paperwork?

If so which version of the online full service do i need to purchase?

thank you

[AnnetteB6]

Even though I am not well-versed in international and foreign tax issues, many of our Tax Experts are and they can help you get your taxes filed accurately.  You can start your own return using TurboTax Online and then upgrade to a higher level of service as you go if you need additional help.  Since you are reporting rental income, you need to use the Premier or higher version.  

As for some of you questions about reporting the rental income, I'll try to give you some guidance.  Since you own half of the property, you will only report half of all of the income and expenses as part of your return.  As you go through the rental property section of your return you will need to convert the amounts from euros into dollars since the tax return will be in dollars.  

You can use whatever paperwork is available to you to determine what you need to report on your return.  None of it will be required to be sent to the IRS with your tax return.  The only reason you would need it for the IRS would be if your return is audited and they request documentation.  Just be sure to keep your own records for the information you report on the return.  

Lastly, since the property is located in a foreign country, the depreciation method may differ than if it were in the US.  Pay close attention to any questions related to where the property is located.  

@CThunder