Welcome to the MDTAXES Message Board

The MDTAXES Network is an affiliation of CPAs that specialize in the tax planning and preparation for young health care professionals.  Please leave your questions or comments for our CPAs, who visit the message board regularly, or review the answers, suggestions and ideas posted in response to your colleagues' questions.

Please check out our other Message Boards available at www.FindAGoodCPA.com.

Please note: We are NOT affiliated with the Maryland Tax Department. If you're looking for information about Maryland income taxes, go to www.marylandtaxes.com.

Retirement Planning
Start a New Topic 
Author
Comment
View Entire Thread
Re: Retirement Savings Options for Expatriates

Keith, it's my understanding that profits from owning rental properties are generally considered "passive income" and do not allow for retirement plan contributions to be made based on net rental income. There is an exception according to IRS Publication 527 (https://www.irs.gov/pub/irs-pdf/p527.pdf) in situations where the landlord provides substantial services as follows:

Schedule C (Form 1040),
Profit or Loss From Business

Generally, Schedule C is used when you provide substantial services in conjunction with the property or the rental is part of a trade or business as a real estate dealer.

Providing substantial services. If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business. Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc.



I've had this issue audited one time since my client was taking business losses on a Schedule C instead of having the rental losses phased-out through the Schedule E, where rental income and losses are generally reported. The IRS agent did allow the losses since the rentals were all for a period of a week or less, and my client did all the work turning the property over each week, and advertising for renters. It was more of a business, therefore, than a rental.

Zip Code: 01801

Re: Retirement Savings Options for Expatriates

Andrew, I suspect this would be the case. I suppose that I really have no options for saving pretax income for retirement as long as I work for a non-US based company.
Thanks.
Keith W.

Zip Code: 02139