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Income from a Sold Property outside US

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    Income from a Sold Property outside US

    Situation: A client sold a property outside the US. After selling the property, the client paid 6% for the property tax to the country where the property was located. I understand that a client has to pay 20-25% for the tax here in the US. So my question is/are:

    First: What form should I use to report the income?
    Second: If the client has already paid the 6% tax outside the country, How will it be declared?
    Will the 6% tax that was paid be part of the deduction? Or should I just automatically deduct the 6% from the 20-25%?

    Please advise. Thanks.

    #2
    Originally posted by bernadette View Post
    Situation: I understand that a client has to pay 20-25% for the tax here in the US. So my question is/are:

    First: What form should I use to report the income?
    Second: If the client has already paid the 6% tax outside the country, How will it be declared?
    Will the 6% tax that was paid be part of the deduction? Or should I just automatically deduct the 6% from the 20-25%? Please advise. Thanks.
    1. What kind of US tax are you talking about -- income tax? Or something else?
    2. What kind of tax are you talking about (6% other country) -- you said "property tax." Was this actually an income tax?
    3. What country was it?
    4. Do we have a tax treaty with that country?

    If your client is a US citizen or resident alien who files an income tax return in the US, then he reports on worldwide income, including this property sale.

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