Skip to main content
January 10, 2023
Solved

I have foreign income I need to declare in South Africa which has a double taxation agreement with US, but it need be declared. Is this something I can do via TurboTax?

  • January 10, 2023
  • 2 replies
  • 0 views
I am trying to pin point what package on Turbtax can help me with my taxes and answer my questions or whether i need to find a specialist? 
Entered US September 2022
Started working in the US November 2022
Based in Texas

Then another question: My wife was still working for a South African company till end of December 2022 while she was in the US. She is paying taxes on that income in South Africa. Assume i need to declare that?

Best answer by pk12_2

@daniel-t-4c-com 

1. Whereas US taxes Residents ( GreenCard / Resident for tax purposes ) & citizens  on world income , South Africa only taxes its Residents { Article 4 of the  US-South Africa Tax Treaty )  on world income  but  only on in-country income for Non-Residents.  This and the fact that your spouse performed work ( for a South African entity ) while her tax home was in the USA, suggests  that this income  is taxable only by US ( for US purposes  this is US sourced income by a US person).  I do not believe , per the tax treaty that this income has to be declared to South Africa , since your spouse was not a resident of South Africa at the time  ( please confirm  that she was indeed in the USA at the time and was not  "ordinarily resident " of South Africa at the time ). I am not quite sure where it lands you because  I don't know whether you actually resided in SA during the last five years, whether you meet the Physical Presence test  -- five past year' residence.   This is my source on the subject ---> https://www.sars.gov.za/individuals/tax-during-all-life-stages-and-events/tax-and-non-residents/

 

2. For your rental income, this definitely income that will need to be  declared to both US and SA.  Generally it is a good idea to settle  the SA tax return  before doing the USA version because , to avoid/ ameliorate  double taxation, you will need to claim foreign tax credit on the US return.  You report your Rental income on Schedule-E and depending on the  foreign tax amount , submit form 1116 for tax credit.

3. My personal pref. is to use downloaded/ CD   windows  version of TurboTax   "Home & Business" -- everything on my machine, amendment is easy, next year work becomes a breeze etc. etc.

 Have I covered all your questions or did I miss something ?

 

Sorry for the delay in reponse

 

pk

2 replies

Employee
January 10, 2023

@pk12_2 may be able to help. Stay tuned.

Employee
January 11, 2023

@daniel-t-4c-com ,  need more info on your own visa status -- are you on H1-B or as an immigrant-- ditto for your spouse.

Because if you are a US person ( citizen/GreenCard / Resident for tax purposes ), then your world income is taxed by US  , otherwise only US income is taxed.  Also if the work is performed  here  on the mainland  ( i.e your tax home is US ), then the income is  US sourced.

So please answer my questions -- that will tell me whether you can use TurboTax or not.

Also do you have any permanent home in SA  ( as I understand the treaty, persons with permanent residence / property in SA are taxed as resident of SA -- but of course I will go through the treaty again once I hear from you .

January 11, 2023

Hi
Thanks for your reply @pk12_2 
Me, my wife and 2 kids is Green card holders. 

There is a double tax treaty between the USA and South Africa and from my research and what I have been told that I won't require to be paid taxes on my South-African income. 

We do have investment property left in South Africa that is being rented out. One of them in our personal names and another in a family trust where we are trustees. 

I suspect my wife that has been earning a South-African income while living in US might need to pay some kind of tax?
She was however earning an income while I was a dependent which might make a difference. (Only 2 month's but worth mentioning)

January 12, 2023

Resident aliens file 1040NR and are required to declare all the income that they make.  Not all of it is taxable - your treaty with South Africa is a good example - but it all needs to be declared.

 

TurboTax is set up to help.  When you go online the system will tell you what version to use as you give it more information about your family and your situation.  Just make sure to file whatever taxes are required internationally prior to filing your US return - you will receive credit for foreign taxes paid on your wife's income earned remotely while you were here so that you won't be taxed twice.

 

Here are some excellent tips for resident aliens filing in the US.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"