# US Expat - Reporting Rental Income in Michigan while overseas



## ssmmss (Nov 29, 2014)

While living overseas and in addition to filing my US federal return, do I need to file my Michigan return and report my rental income on it as well. I am reporting that rental income on my federal return. I don't live in Michigan anymore and don't use my house there except for renting it out. Thanks.


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## nyclon (Apr 3, 2011)

I have moved your query to the tax forum.


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## Bevdeforges (Nov 16, 2007)

ssmmss said:


> While living overseas and in addition to filing my US federal return, do I need to file my Michigan return and report my rental income on it as well. I am reporting that rental income on my federal return. I don't live in Michigan anymore and don't use my house there except for renting it out. Thanks.


If you are no longer resident in Michigan you shouldn't need to file a state tax return. But check the rules for Michigan taxes. You may need to file something for the rental income depending on how you are doing that - like, through an agency or something. (Tax law varies greatly by state.) 
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

Yes, you will almost certainly need to file a non-resident Michigan state income tax return (Michigan "Schedule NR"). You have Michigan source income, and it is taxable.

The tax you owe/pay to Michigan can be deducted from your U.S. federal income tax return on Schedule A if you itemize deductions.

It's also likely that the tax you owe/pay to Michigan (and to the IRS) can appear as a foreign tax credit on your income tax return in the country where you reside and thus help you avoid double taxation on that income. Or, even better, if the U.S. has a tax treaty with the country where you reside then, per the treaty, you may not owe any tax at all on your Michigan rental income even if the U.S. (federal and state) effective income tax rate is lower than the effective rate where you live.

Please note that rental income is not earned income, so it cannot be excluded from your U.S. federal income taxes via the U.S. Foreign Earned Income Exclusion.


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## Bevdeforges (Nov 16, 2007)

Whether or how you report the rental income on your country-of-residence tax forms will depend on how foreign source income is taxed there. Not all countries tax residents on world-wide income. (And for those that do, the manner of excluding it from double taxation varies.)
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

If the poster's flag is correct, he/she resides in the United Kingdom. The United Kingdom taxes its residents' worldwide income, but the United Kingdom also has a tax treaty with the United States. Hence I mentioned these possibilities.


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