# Former expat to Sweden - back in US



## saracita (Aug 16, 2011)

I moved back to the US 1.5 years ago after 11 years in Sweden. This is the first year where I've lived the whole year in the US, so I have some confusion as to which income I should declare in which country. 

Even tho we live in the US my husband and I still have some Swedish income, like dividends and interest from Swedish investments and bank accounts... My husband also got paid some small amount of income from a couple of Swedish companies. The Swedish institutions withheld tax on this but I am pretty sure I should be paying US tax on this income instead, as we've been outside of Swe for more than one year now.

So I'm trying to figure out - which country gets the tax?

Shouldn't the US get it since we live here now? 

Or if Sweden is supposed to get it - can I use the Foreign Tax Credit if I currently live in the US? 

Also, my husband ran a small business as a side project in Sweden and got a tiny amount of income from that. Do we need to report his business to the US - like on the FATCA?


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## Bevdeforges (Nov 16, 2007)

The US side is actually pretty simple: you declare ALL your worldwide income. That includes all foreign source income, even if it is taxable elsewhere.

Don't know Swedish tax law at all, but generally, once you're non-resident, you only have to declare and pay taxes on income sourced from the country.

You can find the US-Swedish Tax Treaty and explanatory documents here: Sweden - Tax Treaty Documents Not exciting reading, but it will give you an idea what is taxable where. Generally, if your foreign income is taxable by the source country, you can take the Foreign Tax Credit against the tax generated on your US tax returns by the same item. But there are some other ways of avoiding any potential double taxation.
Cheers,
Bev


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## saracita (Aug 16, 2011)

Thanks for answering Bev!

The thing is, unfortunately we never properly filled out the paperwork that we had left Sweden, which we should have done (and are going to do asap)... So Sweden still thinks we live there, and that's why they deducted taxes from our Swedish income. I'm pretty sure that for nonresidents of Sweden we don't owe Swe tax on any income but our apt rental income. I think we should be paying tax on to the US now since we live here. But I'm not 100% sure.

So question is, since it's so late in the game, should i just pay the taxes to both countries now and then try to amend it and see if I can get the tax bk from Sweden? 

Or should I go with Sweden taking that tax income and then enter the amount I will pay to Sweden on the Foreign Tax Credit form so the tax won't be paid to the US? 

Sarah


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## Bevdeforges (Nov 16, 2007)

Technically speaking, if you "expect" to get the tax back from Sweden, you aren't supposed to take the foreign tax credit for it on your US taxes. Then again, the chances of the US actually knowing what's going on here is pretty slim unless you're in an upper income bracket or you have "unusual" sorts of transactions on your return.

At the moment, I'd treat the two countries' tax returns/declarations as separate. File what you have to to get properly recognized as "non-resident" for Swedish tax purposes and then file to get your withheld taxes back. (Sorry I can't help you much on this - no idea how that tax system works.) You might try the Swedish Embassy (or Consulate) website to see if they have anyone there who might be able to help.

But on investment type income, it's fairly common that the foreign government withholds some level of taxes (even for NR filers) which you can either take as a foreign tax credit or deduct from the gross amount of the interest/gain when reporting it to the US. (Check on that treatment - I may be confusing it with how things are handled here in France.)

Depending on how much difference it makes, you can always just file both places, each independently - and then file an amended return for the US later, claiming back any tax you wind up paying to Sweden. Or maybe someone else will have an idea here.
Cheers,
Bev


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