brit_usa2014

Bit of background, my dad and I jointly own a flat in the UK for which my dad is paying full taxes on. The rental income received last year was approx. £4400. Im on H4 here and not working. Although it's jointly owned it goes into my Dad's account as my power of attorney is with him and he's the one that manages all taxes that needs to be paid with regards to the rent that comes in. So essentially although the flat is jointly owned the rent does not come to my account as a direct income but it does go to my Dad as income who pays full taxes and he then puts half of it into the bond which is on my name. Do we need to declare that on our tax return as income earned? We have no plans of not declaring it if that's the case, but a lot of people I spoke to told I don't need to declare as there's a certain amount of income if you exceed then needs to be declared. But others say we need to declare it. Hope that makes sense.

Thought to ask on here with some of the experts. Thanks.

nun

Are you filing married jointly in the US?

You are liable to tax on UK source income in the UK and also in the US if you are a US tax resident. If your only UK income is from the flat then it looks like that will fall below the UK personal allowance......you should check if you qualify for that.

If you are a US tax resident you are also liable to tax on your worldwide income, but how you deal with this will depend on your income level and whether you filing status. Also what is this "bond" you mention. Is it something like a "savings bond" inside an ISA or with a bank?

brit_usa2014

Thank you for your reply. To answer your questions: Yes, we are filing tax jointly as married here in the USA and the rent from the flat is the "only source of income". I have no other income in the UK. And I do not file separate tax as I'm on h4 and not a tax payer.
When I say bond I mean as in National Savings & Investment and not in a regular bank account.
Hope this helps.

nun

If you are filing jointly in the US you (and your spouse) are a US tax payer. So the income you get from the rental and the Savings Bond will be US taxable. You should include those along with your spouse's income on your US taxes.

You are also liable to UK tax on your UK source income, but it looks like that will be less than your personal allowance. You can apply to have interest paid tax free as you are not a UK tax resident with form R105 and also to get your personal allowance on form R43. The upshot should be no UK tax to pay and so no foreign tax credits on your US taxes......but you will have to pay US tax on the UK rent and interest.