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Questions about expat tax filing

1.An expat who is senior citizen and US citizen ..wants to file tax return. She has interest income as well as capital gains ..both are passive income.

2. She in residing in India and tax year in India is April 20 to March 21 but in USA its Jan to Dec. so she has figure out her income between jan to dec 20? if so what is the best way to do it ? Statement she received from Indian banks or brokers are always showing income between April 1st 2020 to March 31st 2021.

3. When I try to enter income under federal tab - it asks me to enter 1099-INT and 1099-B - but Indian banks or brokers don't provide such forms ..they give you end of financial year (april to march) statements but it does not mention like their EIN number or anything else..so how and where do I enter Indian interest income and capital gains?

4. She had about 8 different accounts with 8 different banks and 2 different brokerage accounts

When we enter interest income - do we enter 8 different entries for each bank or we can just combined all interest income and in the name of the payer - we can write blanket for all banks like 'Various Indian banks'? it will be too tedious to write each bank detail individually. Same question for 2 different broker accounts. I don't think IRS want to know names of each banks and brokers ..correct me if am wrong?

5. Her approximate foreign tax to be paid is about $1500 - because she had all passive income she does not qualify for Foreign income exclusion so tax credit is the only option. Her total gross income is slightly above standard deduction of $14050 (senior citizen)
Foreign Income
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Tax Professional Answers

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Vivek Shah
1. Ok, Noted.
2. There are two approaches: One is that we can bifurcate income per calendar year and report income accordingly; and second is that we can change method. As per this method we can report income per Indian FY in 1040 tax return and IRS allows that we can report entire income from April to March in US tax year that is (Jan to Dec). You don't need to do bifurcation of income in 09 and 03 months. Generally, we prefer second method which makes easy to take benefit of the foreign tax credit.


3. Interest income will be reported on Sch-B for which we don't require to input EIN. Along with it, we will put description as "Various Interest income/Dividend-India" and will entire Interest/Dividend income. Similiarly, for Capital Gain, It will be reported on Sch-D with entire amount as "Various Capital Gain/Loss-India" and we don't require to put each and every sale or purchase transactions.

4. Normally we have to report separate US interest income as IRS will look for SSN/EIN to match interest income with 1099-INT issued. But in our case, as payer is not issuing 1099-INT,we can report total interest income from all the banks as "Various Interst Income-India" in a single entry. We don't require to report it separately from all the banks.

5. Yes, as mentioned foreign tax credit is the only option and we can take credit through form-1116.
Leave a Comment 28 weeks ago

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Bhadreshkumar Joshi
I am friendly with FREETAXUSA, the tax software. I do not think that ( or any, for that purpose ) software will accept all entries without the forms viz. 1099-DIV and others. Do we have to do the return ( 1040 )manually, to accommodate India information? Please help. Thanks Mr Shah..
Reply 19 weeks ago
 

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