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· Registered
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Discussion Starter · #1 ·
Hi sorry if this has been covered. I searched and could not find it.

I have a American accountant that handles my foreign tax issues. He is saying that I do not need to declare my foreign passive income from bank dividends and rental income but only need to declare the taxes i paid in 2016.

The closest thing i could find online is one youtube video mentioning if my tax liability in the US was higher than my tax liabilty overseas then i did not need to declare foreign investment income and only need to declare taxes paid.

Second thing i struggle to understand is he is only asking for the taxes that were paid in 2016 not the taxes i will pay in 2017 for 2016 taxes.

Can anyone confirm this? I am not sure if my accountant is not current on these issues and perhaps i should find another.

Thanks for anyones time in advance

· Administrator
54,674 Posts
That's a new one on me. Normally, you have to split your declared income into "earned" and "passive" - and then you apportion your Foreign Tax Credit based on taxes paid for earned income vs. passive income. No idea what that YouTube video is talking about.

But the taxes paid in 2016 is because the US tax system is cash basis, and technically speaking, you claim on your 2016 tax return only those foreign taxes actually paid in 2016 (most likely for your 2015 tax obligation). But there are some ways around that.

Still, I'm a bit skeptical of what your accountant is telling you. You may want to take a look at IRS Publication 54 to get a better handle on how things are supposed to work and then perhaps ask some pointed questions.
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