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INCOME TAX QUESTION How do I report some money(75K) that came from abroad, which I used to give as down payment on my house?

Winthrop, MA |

I have recently bought a house and part of the down payment (75K) came from my checking account I had in Brazil. This money I have saved through a period of 5 years and it's from an apartment I have rented there. Which form should I use to report that money and am I going to be taxed?

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Attorney answers 2


It depends on whether you reported this income in prior years when you rented your apartment in Brazil. US citizens are taxed on their worldwide income, so the rental income you earned from Brazil should have been reported in the years in which you earned such income. If you reported the income in previous years, then the repatriation of such funds to the US is not taxable (my comment assumes that you rented the apartment as an individual and not through a Brazilian business entity).

If you never reported the rental income previously, then the income should technically be reported by amending your previous tax returns to include such income and any applicable rental expenses. Other practitioners may have alternative methods of reporting this rental income in the current year. Note that the mere disbursement of funds from a foreign account need not be reported since such disbursement is not "income" for US tax purposes -- the funds were income at the time that you earned such funds. I also note that you probably had FBAR reporting requirements as well (and may have continuing FBAR reporting obligations). Consider engaging a tax attorney to guide you through these issues.

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Anything contained in this response is for informational purposes only and neither the author nor The Ornelas Firm PLLC ("Firm") makes any representations as to the accuracy or completeness of anything contained in this response. Nothing herein shall be interpreted as legal advice from the author or the Firm, or as creating an attorney-client relationship between the solicitor and the author or the Firm. Neither the author nor the Firm will be liable for any losses, injuries, or damages from the display or use of this information. You should consult an attorney whenever confronted with a serious legal issue.


There are many unanswered facts raised by your question, which is why Attorney Ornelas' answer is correct. US citizens and residents (a legal term of art) must report world wide income (including the rental and other income in Brazil) and they must report that you had a foreign bank acount on Schedule B of Form 1040 and also must annually file a Form TD F 90-22.1. The failure to do so subjects you to very severe penalties in addition to the income taxes and intereston the unreported rent and financial institution income. I also highly recommend you seek competent tax counsel especially one that is familiar with the recent Voluntary Disclosure programs to be sure they have the prerequisite experience.

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