Blanca

Hello everyone,
I need guidance on how to best approach this whole tax filing. I have a full time job here in US (live in Florida). I also have UK house and rental income from it. I have some accounts and credit cards in various banks in UK. It's giving me a big headache cause I have no clue how to do this who to contact for help etc. I am a person who does everything by the book and just want to make sure I will report all correctly to IRS.
Any guidance would be very much appreciated.
Thank you so much

SanDiegogirl

Use Turbo tax? If you choose to be hand held, it prompts you to input data for overseas accounts, rental income etc etc

neill

Be aware that if you have over $10000 US overseas (in total outside the USA), you will need to do a separate filing every year to report your foreign bank account max values for the previous year, to the Treasury (FinCEN form 114).

(If you use TurboTax with Rental Property (Yellow?) edition, it should alert you to this).

tom169

Having a CPA prepare them the first year could help you better understand the form numbers and tax liability. Then going forward tools like turbo tax can make DIY fairly trivial.

Cook_County

Most (but not all) tax professionals would report the foreign rental activity on Form 8858 and on a Foreign Branch Form 1116. You may want to check if any software chosen supports these forms.

Glasgow Girl

The IRS does not care about your credit cards.

Foreign rental income (and expenses) are reported on your normal tax return on Schedule E, assuming your property is held in your name and not an LLC, trust or any other legal entity. You report it in exactly the same way you would report rental income from a US property, the only difference is that you have to convert everything into USD and you must depreciate over 30 years. The right version of Turbo Tax (Premier and/or Deluxe) walks you through the process step by step and is quite easy to do, so long as you pay attention.

Turbo tax will also complete Form 8938 which is required if your have foreign assets that in total exceed $50,000 on December 31st of each calendar year, or $75,000 at any point within the calendar year (double those amounts if married). It is tedious to gather all the information and translate the require amounts into USD but not at all complex, and you have to gather the data even if you use a professional.

FBARs must be submitted if your total foreign assets exceed $10,000. Turbo Tax does not do that but it is very easy to complete these forms online yourself. https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html. The time consuming part is gathering the data, again tedious but not complex.

If your foreign accounts include anything other than cash, bonds, or straightforward shares held directly with a company listed on a recognized stock exchange then they are a PFIC. All units trusts, Investment Trusts, and OEICs are PFICs. If you own any PFICs then you must fill in Form 8621 every calendar year for each PFIC. These are very complex and very tedious forms and are required to calculate the tax due on these investments.

With a few exceptions foreign assets include just about any foreign asset that has a monetary value including pension funds, ISAs, and life assurance. It is critical to report all of them on Form 8938, the FBAR and Form 8621, and to report and pay tax on any dividends, interest or other income. Failing to do so can be financially crippling.

Turbo Tax will handle your rental income, and Form 8938 but not Form 8621 and is quite easy to use. FBARs are the easiest of all using the online system.

The advice from tom169 to use a professional for your first year is good advice. That is what I would do, and do it yourself thereafter with Turbo Tax. One caveat though, if you do have any PFICs I think you will need a professional for every year you hold them but in reality there is NO good reason to do so. The tax rates are draconian and the reporting requirements are very complex, sell them and reinvest in US based investments.