If  you paid taxes in Germany you may take a credit in the U.S. or you may take a deduction on Schedule A.  Generally a credit is more advantageous. You use Form 1116 which is one of the most complicated forms the IRS has, but fortunately TurboTax walks you through it.  The general idea is to apply a pro-rated portion of your deductions to your foreign income and then to calculate what portion of your U.S. tax is due to your foreign income.  The result is the maximum you can claim, (or the actual tax in U.S. dollars whichever is lower). Unused foreign taxes can be carried forward 10 years, and Turbo Tax will keep track if you use it every year (Form 1116 Wks is updated every year with the correct information). You will probably find U.S. taxes are lower than Germany and so you won't be able to use all the tax as a credit (U.S. personal taxes are among the lowest in the world).  Form 1116 Instructions and Pub 514 offer some 'light' reading explaining the deduction. If you choose to read them, make sure your mind is clear, you have time, and there is a glass of wine nearby. ... View more

Previous answers to this question claim you cannot claim the home office deduction on Schedule E because it is 'passive' income.  This is incorrect.  Courts have ruled against the IRS on this question, and as long as you satisfy all of the requirements ... ALL ... you may use the deduction. This would normally mean you are licensed in real estate and being a landlord is something you do as a business as opposed to someone who just owns rental property as a sideline. If you are paying someone else to manage your properties or find tenants you probably wouldn't qualify.  However, even though the IRS has lost on this one, they don't make it easy - there is no mention in IRS support documents of how to claim it.  Since they don't say how to do it, just enter it as an 'other' expense (line 19) and refer to Form 8829 you also fill out.  Refer to your accountant if you are unsure whether you qualify. ... View more

Toggle 'go to forms' and pick Schedule C ... View more

The IRS, via Form 1116, applies a portion of your deductions to your foreign income, and then uses the result to calculate what per cent of your taxable income and taxes are attributable to the foreign income in that category (passive for dividends). The result is the maximum you are allowed to claim this year, which often results in unused foreign taxes which may be carried forward 10 years.  However, you may have made an error on the form.  Check carefully whether too many deductions were applied to the foreign income.  Also, for investment income, the IRS via Form 1116 bases the foreign income's share of deductions on the cost basis of the investments generating the income vs your overall investment cost basis.  That ratio will affect the % of investment deductions applied to the foreign income  -  the lower the ratio the better.  In summary: the maximum you can deduct is calculated in Form 1116 - so check that form carefully. Last year, if your total foreign tax was $300 ($600 if joint return), you paid all through a 1099, and  you had only passive income, you will not have filed Form 1116 and you had no limit on deductions. ... View more

If you are referring to line 8 of Form 8829, it is not asking for the portion of income derived from the business use of the home; rather it is asking for the portion of capital gain allocated to the business use of the home (Form 8949).  If you haven't sold your home you won't have any. ... View more

Check to see if you entered telephone expenses exclusively for business. i.e. Cell phones used for business.  If you entered telephone expenses when entering business expenses it will show on line 25 per IRS instructions.  The amount seems right for telephone expenses. ... View more

This schedule and instructions apply to all individual taxpayers who have business income. This schedule is used for recording all business income that is reported on IRS schedules B, C, D, E and F as well as any other items of business income and gain separately stated on the federal Schedule K-1, on the federal 4797, and miscellaneous federal income tax adjustments, if any ... View more

Taking a credit is almost always more advantageous - but more work ... View more