Question

How to add foreign tax credit on foreign rental income?

Forum|Forum|3 years ago
April 10, 2023
1 reply
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I can't find where I can add the foreign tax credit for taxes I paid to a foreign government on rental income of a property outside US. When I got to foreign credit, turbotax asks "Did you pay taxes on income you made while working outside the U.S.?" and if I say No, it doesn't let me add anything.

TurboTax Premier Online

P

pk12_2

Employee

@Gustavo B , Assuming that you are US person ( Citizen / GreenCard / Resident for Tax purposes ), you are taxed on your world income and therefore you report , on Schedule-E, your income and expenses associated with the rental income ( which country? ). If the taxes paid to the foreign taxing authority is based on income and not value added ( such as VAT in the UK, India or IVA in MX etc. ) then this is eligible for foreign tax credit-- passive income.

In such a case under deductions and credits you tell TurboTax that you have foreign taxes to claim and it should walk you through filling out form 1116. Just carefully choose the category and you may also have to enter the net income ( the income that is being taxed by both US and the "other country" ).

Do you need more detailed help on this -- if so please provide country of rental, approx. amount of net rent, approx amount of income taxes paid and approx. US sourced income(s) -- if a joint filer. Need these bits of info because using form 1116, will always limit the amount of allowable foreign tax credit.

I will circle back once I hear from you --yes?