My apologies ... although I provided the IRS guidance, above, as I was reading the tax treaty, I was able to see that you will not be taxed twice
on this income and in re-reading my last couple of paragraphs, it appears that I was saying that you did not have to REPORT or pay US tax at all.
I must correct ...
You have two choices.
You can have your U.S. rental income subject to a 30% withholding tax and you have no further requirement to file a U.S. tax return or pay additional U.S. taxes.
You may, however, choose to consider your rental income as an effectively connected U.S. business activity. That requires you to file a U.S. tax return and itemize your rental income and expenses. See Publication 519, “Tax Guide for Aliens”, for information. Remember, filing a U.S. return requires an Individual Tax Identification Number (ITIN - Form W-7)
If you do this, you can then deduct rental expenses the rental income will not be subject to withholding and will be taxed at ordinary progressive rates. Expenses such as mortgage interest, real property taxes, maintenance, repairs and depreciation (accelerated cost recovery) may then be deducted in determining net taxable income. The nonresident must make estimated tax payments for the tax due on the net rental income, if any. The only way these expenses can be deducted, again, is if an income tax return Form 1040NR for nonresident alien individuals.
The IRS office in Frankfurt will accept tax returns, tax payments, W-7 applications, and taxpayer correspondence. Their mailing address is as follows:
U.S. Consular General Frankfurt
Internal Revenue Service
Giessener Str. 30
Tel: 49 69 7535-3834 or 3823
Fax: 49 69 7535-3803
Email: [email protected]
For immediate assistance from a taxpayer specialist, you can call, fax or email the International Customer Service Site located in Philadelphia. The Service Site is open Monday through Friday, for 17 hours each day, from 6:00 AM to 11 PM, Eastern Time. The customer service representatives there can be contacted as follows:
Tel: 001 215 516 2000
Fax: 001 215 516 2555
Inquiries regarding taxpayer identification numbers should be made at
Tel: 001 215 516 4846
Fax: 001 215 516 3271
So, again ,my apologies for not being clear.
As per the tax treaty discussion above, you will NOT have to pay tax to BOTH US and Germany.
However, you will have to pay US tax and then claim credit for those taxes paid, in Germany.
OR if the income is collected by an agent in the US and should be witholdng the 30%, you can submit form W8-BEN to the withholding agent to claim exemption from, withholding as a resident of a foreign country with which the United States has an income tax treaty.Form W-8BEN
Let me know if you have questions,