emperor41

I have a question I was hoping somebody might be able to help me with. I am a LPR, married to a USC, living in the US, and have done for about 5 1/2 years (I did the k1 visa thing).

I have a flat in the UK which I rent out, and get rental income from, which is paid into a UK bank account (which has a running balance of about 3k GBP.) I file a tax return every year in the UK through my UK accountant and therefore pay tax to the UK govt on my rental income, and any interest earned from my UK bank account (about 2 GBP per annum!).

Do I need to be paying tax on this in the US as well?

Jerseygirl

Sorry I don't know....but you declare it on your US tax return right?

emperor41

Well, I haven't because I already pay tax on it in the UK.

Kate2112

Do you declare the money in the UK savings account?

Jerseygirl

You should declare ALL worldwide income to the IRS.

emperor41

No, because it is less than $10,000.

Kate2112

Correct - problem solved

emperor41

So I should just let sleeping dogs lie?

Kate2112

Thats how I declare mine.

Jerseygirl

There is no need to declare the account to the IRS as long as you do not have a total of more than $10K in all foreign accounts...not just this one.

Your biggest problem it seems is that you have not declared any of the rental income in your US tax returns.

emperor41

I only have one foreign account, and that is the one I mentioned already. I had no idea that I was supposed to delcare the UK rental income in the US, because it is declared and taxed in the UK. What should I do?

Jerseygirl

Maybe someone on here will come along and give you an answer.

If it was me I'd ask an accountant who is experienced in foreign taxation...I don't know whether you should even be paying tax in the UK now you're an LPR. I would certainly include the income on your US tax return from now on.

Voltore

As I recall you declare it as income and the tax paid, and it becomes a tax credit. From experience I would benefit because the UK tax paid was more than I would've under US tax %'s and so I saw a little back. That said, find a tax advisor that works with expats. I'm in the DC area and mine has a lot of expats from around the world and seems clued up.

Dan725

The other question is - if you are resident in the US, why file a UK tax return and pay taxes in the UK? Or if you have to file the UK tax return, surely you shouldn't have anything to pay on account of not being resident there?

Jerseygirl

Exactly...that's why I recommend she consults with an accountant who is experienced in foreign taxation