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    vipulgupta470's Avatar
    vipulgupta470 Posts: 1, Reputation: 1
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    #1

    Apr 16, 2012, 11:21 AM
    No Tax paid in foreign country but would be forced to pay tax in US
    Suppose I have a property in India from which I am getting rent in my NRO account amounting to 10,000Rs per month. I don't have any other source of income in India. This amounts to 1.2 lakhs per annum based on which I don't have to file any taxes in India as my income in India is less than than lowest taxable bracket which is 1.6 lakhs. In short, I don't have to pay taxes in India for that.

    Now, we need to declare our Global income while filing taxes in US. So, now I would need to declare my rental income as "Other Income" while filing taxes here, which means that I would have to show 200USD per month amounting to 2400 USD per annum. Suppose my US income is 100 K and I would need to add my indian rental income to it, my total income in US would become 102K approx and I would be taxed on that. So, now I would be paying taxes on 2400 usd earned in India even though in India I didn't pay any taxes on that.

    Can anybody confirm this please?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    Apr 23, 2012, 11:41 AM
    You MUST declare all world-wide income on your U.S. tax return if you are filing as a resident.

    However, rental income is reported on Schedule E, on which you also report your rental EXPENSES, to include depreciation on the property (over a 40-year period).

    In most cases, the expenses ewxceed the income, and you show a paper LOSS.

    If you want my professional help, double-click on my title above and scroll down to my profile/signature. You will find my email address and websites there if you cannot see it on this page.
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