IRS Filing Question
Posted date : Aug 9, 2019.
In 2019, we rented our Florida/Jensen Beach condo out to Americans (for the first time) for the months of February/March through a Jensen Beach-based realty management company. Can we pay the tax on these U.S. rental earnings in Canada, or must we pay it to the IRS? If the latter is the case (and we have to pay the rental earnings to the IRS), then what tax form would we use? And how will that tax form affect filling out our 8840 (which essentially states that we filed our 2019 taxes in Canada) if we have to pay the rental tax in the States too? And finally, if we must pay the rental tax in the U.S., have we opened ourselves up to worldwide tax? I still work, but my husband is retired. So that prospect would be scarier for me, as we both co-own the condo.
Ed.: By renting your condominium, you are considered to be operating a business in the U.S. In the year following the year of the rental, FORM 1040NR must be filed. You would also report the income in Canada, getting credit for any tax paid in the U.S. You should also file the 8840 for the relevant year, including it with the FORM 1040NR. If there is more than one owner of the property, there must be a separate filing for each person. There are no worldwide income considerations with this, as you are still a Canadian citizen.