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Barbara, Enrolled Agent
Category: UK Tax
Satisfied Customers: 3365
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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I am a UK Citizen living in California. We have income from

Customer Question

I am a UK Citizen living in California. We have income from property in the UK that was below the £10,600 personal tax free allowance in the UK. I am now trying to file 2015 USA tax return and the person I am using says I will need to pay tax on this even though the UK did not charge any tax. Any thoughts?
Submitted: 1 year ago.
Category: UK Tax
Expert:  Barbara replied 1 year ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

Unfortunately, as a resident of the US for tax purposes, you are required to report (and pay tax on) your worldwide income. In the case of the rental property income, you will report and pay tax on it in the US. If you had paid tax to the UK on the rental income, you could have taken a credit for the taxes paid to the UK.

Article 6 of the Tax Treaty between the US and the UK provides that:

1. Income derived by a resident of a Contracting State from real property, including income from agriculture or forestry, situated in the other Contracting State may be taxed in that other State.

2. The provisions of paragraph 1 of this Article shall apply to income derived from the direct use, letting, or use in any other form of real property.

3. The provisions of paragraphs 1 and 2 of this Article shall also apply to the income from real property of an enterprise.

Your tax preparer is correct.

Please let me know if I can assist you further.

Thank you and best regards,


Expert:  Barbara replied 1 year ago.

Just following up with you to see if you have any other questions or concerns. If so, please let me know, and I will be able to assist you further.

Best regards,