Do I need to file taxes for 2017?

[MBS 1]

Hi Everyone! Thank you for your time and help in advance.

 

Background

*I have moved USA with K1 Visa in April 2017, Got my Green card during the second half of January 2018.

*I have had foreign rental income and a mortgage in my previous country of residence since April 2017. I plan to pay taxes for these in my previous country of residence.  I also understand that I should be paying these taxes to USA for 2018 tax year.

*During April 2017 I as well transferred my savings to a USA bank account and kept it in a savings account, it was more than 10K usd (above filing limit). But interest on savings should be minimal.

*** But Most importantly, I did not work in 2017 tax year at all in USA. 

* I do not need to file joint taxes with my US citizen wife and I would prefer not to for 2017 to keep it simple for myself & my wife. 

 

My understanding from IRS website is I was not a tax resident until my green card issued, which is after tax year 2017.

Hence, I do not need to file any taxes for 2017 (given I am not choosing to file jointly with my wife), Even though I had a savings account with some money in USA and rental income/mortgage in a foreign country since 2017 April.

 

I have read some different perspectives to a situation similar to this under a different topic in this forum, perhaps I was not able to find if there are some clear info on this;

 

But could plse share if my above understanding is correct or can you plse correct me?

 

Apologies if my English was not super clear.

 

Thanks and Regards.

 

 

 

 

 

[Italian_in_NYC 259]

You were a tax resident in 2017 (physical presence test).

You need to file the return (rental income).

You need to file an FBAR and possibly form 8938 (assuming the amount over $10k was held in a foreign account before April 2017).

If the rental property is owned through a foreign entity, you may need to file other forms (8621, 5471, 8865, 8858, etc).

[MBS 1]

Thank you Italian_in_NYC, sorry for my delayed response. 

 

I have a follow up question, If you may kindly answer or anyone else seeing this message.

 

When I talked to tax authorities in my previous county of residence (Sweden), they have informed me that I should be paying the rental income tax there. I was not get a hold of a senior person there and it did not feel at all like customer service know the details of this type of tax cases. And felt like they just came from a simple logic like: "if you earn in this country, you need to pay tax in this country"

 

A- Is this true? Or can I choose to pay the tax in USA completely w/o needing pay it in the country where I receive the rental income? 

 

B- Or if I have to pay it in the country of rental income, and Sweden is known for very high taxes,

1- is it possible to get a part of the high taxes paid in Sweden from US tax return as USA rental income tax would be lower?

2- Is it possible to make deductions that available in USA, but not in Sweden/foreign country,  i.e. mortgage - for some reason you can't deduct mortgage from Swedish rental income tax; In my USA tax filing?

 

Many Thanks

[Italian_in_NYC 259]

1 hour ago, MBS said:

Thank you Italian_in_NYC, sorry for my delayed response. 

 

I have a follow up question, If you may kindly answer or anyone else seeing this message.

 

When I talked to tax authorities in my previous county of residence (Sweden), they have informed me that I should be paying the rental income tax there. I was not get a hold of a senior person there and it did not feel at all like customer service know the details of this type of tax cases. And felt like they just came from a simple logic like: "if you earn in this country, you need to pay tax in this country"

 

A- Is this true? Or can I choose to pay the tax in USA completely w/o needing pay it in the country where I receive the rental income? 

 

B- Or if I have to pay it in the country of rental income, and Sweden is known for very high taxes,

1- is it possible to get a part of the high taxes paid in Sweden from US tax return as USA rental income tax would be lower?

2- Is it possible to make deductions that available in USA, but not in Sweden/foreign country,  i.e. mortgage - for some reason you can't deduct mortgage from Swedish rental income tax; In my USA tax filing?

 

Many Thanks

Rental income is sourced to the country where the property is located, so yes, it is taxed in Sweden first (according to Swedish tax law).

You can claim foreign tax credit, however since you have to depreciate the property (over 40 years) it is very possible that you will produce a loss (may or may not be deductible).

Yes, you can deduct pretty much everything related to the production of rental income. Definitely mortgage interest, property taxes, repairs, utilities, and some travel expenses back to Sweden, You report the income according to US tax laws on your US tax return.

Real estate is the best tax shelter!

[MBS 1]

Thanks again for the insight Italian_in_NYC, 

 

Just to confirm  if my understanding of your response is correct? 

 

1- I need to pay taxes in Sweden first, there is no way around it. Can't pay it directly to USA w/o paying it at all to Sweden.

2- Even thought some deductions are not available in Sweden, I can claim these deduction such as repair, utilities & travel to Sweden etc in USA tax. 

 

A question,

 

i.e. if I pay lets say 30% tax in Sweden and this becomes a 10% tax in USA after extra deductions available in USA & lower tax rate;

 

do I get back that 20% difference from USA if my gross total income is high enough - A: in the same year, B- moved to next year, C- I don't get that difference at all end up paying the 30% tax?

 

Many Thanks again, my apologies if I asked too many questions to you 

 

Best Regards. 

[Italian_in_NYC 259]

On ‎3‎/‎10‎/‎2018 at 2:51 AM, MBS said:

Thanks again for the insight Italian_in_NYC, 

 

Just to confirm  if my understanding of your response is correct? 

 

1- I need to pay taxes in Sweden first, there is no way around it. Can't pay it directly to USA w/o paying it at all to Sweden.

2- Even thought some deductions are not available in Sweden, I can claim these deduction such as repair, utilities & travel to Sweden etc in USA tax. 

 

A question,

 

i.e. if I pay lets say 30% tax in Sweden and this becomes a 10% tax in USA after extra deductions available in USA & lower tax rate;

 

do I get back that 20% difference from USA if my gross total income is high enough - A: in the same year, B- moved to next year, C- I don't get that difference at all end up paying the 30% tax?

 

Many Thanks again, my apologies if I asked too many questions to you 

 

Best Regards. 

No. Sweden has the right to tax Swedish-source income. Same way a nonresident alien renting a US property will have to file a 1040NR for that.

Yes, you calculate the business (renting is a trade or business) income or loss according to US tax laws on your US tax returns.

 

If you pay 30% in Sweden, that's final. You do carryover the unused foreign tax credit for 10 years though (you can use it to offset US tax on foreign-source income only).

[curious20 0]

I submitted my sponsor's 2016 Tax documents in December 2017 (before Tax season for the Year 2017 opened). My interview has now been set for Mid-April in 2018. The checklist for the interview says to bring updated tax information, so does that mean my sponsor has to file Tax for the Year 2017 and give them to me so that I could take it to the interview? or should the Tax document I submitted to NVC (the Year 2016) be enough?

[MBS 1]

Hi I am quite new at this. But it seems like logical thing to do is to bring whatever you have, so bring 2016 tax papers again. Only sponsor's W2 for 2017 => since iI assume you/sponsor did not already file taxes for 2017, and the personal tax deadline is mid-apr and dont think irs can come back with any tax return document by then. 

 

Important - if you lived in USA for 2017 more than 185 days even tho you dont have a green card yet, you would be tax liable in USA, and if your income in 2017 was above your state limit to you need file as well. Even though you need to file, you dont need to bring any documents to interview unless you have a W2 (meaning you have been working in a job in USA in 2017).

 

Thanks, this is what makes sense to me, again I am quite new in this forum, so why dont you open a new threat and see what others think about it.

[MBS 1]

thanks Italian_in_NYC for earlier your response