Question

how does a us citizen report farm income from mexico

the us citizen lives in usa but his grandpa died in mexico a d left the family beef ranch to him. he pays a caretaker and sells beef how us this reported on his irs 1040

Answer 1

Explanation:

• A U.S citizen or resident alien has to report all his income sources in the income tax return filed with us government whether income is earned within u.s or outside sources. This is applied to both earned and unearned income both.
• If a taxpayer is a U.S citizen or resident, he has to pay taxes on foreign income, but he is exempt from tax payment in the U.S if he has paid taxes on foreign income in the origin country.
• if the foreign income is taxed by both the countries( U.S and origin country), then there are provisions for income tax credits in u.s.
• There is a need to report foreign income or assets if it exceeds the threshold limit of $10,000.
• U .s citizen or resident shows the foreign earned income in FORM 1040 and interest or dividend income is reported in schedules.

From the above discussion, it can be concluded that u.s citizen who earns farm income from Mexico through beef ranch which is taken care of by caretaker and income earned is taken by u.s citizen.

therefore the income earned in a foreign country has to be reported in form 1040 by him.