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Americans in Auckland Message Board › A NZ Trust - taxable by the USA?

A NZ Trust - taxable by the USA?

Molly
user 12487946
Dunedin, NZ
Post #: 1
Hello all
My husband and I are US citizens (he is also a NZ citizen) living in NZ indefinitely. We live in Dunedin. We have owned a small home here for years and we have just bought another home here.

We have kept the first home as a rental and it is currently rented out.

It seems that we need to put our little rental house into a trust to make the best situation for NZ tax purposes. My questions are - does this rental income need to be reported on our US taxes? And more importantly, before we pay to put the rental into a trust, does anyone know if a NZ trust is taxable by the USA?

Thank you, I know everyone has different specific details, but even any general knowledge on owning a rental property in NZ, or especially about NZ trusts -- and US taxes -- would be much appreciated.

Thank you so much,
Molly George
Susan T.
user 8698094
Auckland, NZ
Post #: 35
Hi, Molly:

What you decide to tell the IRS is entirely up to you, much as in the states, except that it is much harder for them to find out if you are withholding information when you live here. However, if you want to go letter of the law, you are required to report ALL income, from ALL sources to the IRS. I have not looked into trusts specifically, but I presume that if there is income there, it needs to be reported. I do know that you are required to report any interest in a foreign corporation, and all money in foreign bank and investment accounts.

The US, which has always been the only country in the world to have citizenship based taxation, has become particularly draconian in the last year or so, passing new laws with huge penalties for not reporting. The best resource for any and all information on this stuff is the ACA - American Citizens Abroad. Everyone living overseas should belong to this organisation as the information is priceless, and also, they are the main lobbying group for OUR rights! http://americansabroa...­

The best thing would be for you to hire a tax person who specialises in US/NZ tax reporting. There are several companies that do this long distance from the US, meetup has a few as sponsors. I know of a couple in Auckland and one in Christchurch. If you email me I can pass along some names.

Good luck!

Susan

P.S. How's the study going? Sorry I didn't get back to you on that.
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