Timing of US tax filing / German tax filing?

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I apologize if this specific question has been asked already, but I can't seem to find it: 

 

2020 was my first full year living in Germany with income. My tax situation is quite complicated, as I have income from work within Germany, as well as some from work in the US, and some investment related income due to a roth rollover. I have reached out to a tax accountant in Germany in February who said they are working on preparing my German tax declaration, but when I have reached out now asking for an approximate timeline, I haven't heard anything back. I'm going to try calling again this week. 

 

Anyway, my question: According to google, my deadline to file my US return is June 15 (2 mo. extension). First question: Is this "extension" automatic? How do they know I am abroad, or is it simply based on the information I provide when I file the return in that 2-month period? 

 

Second question: I was originally planning to wait for my German declaration to be filed and then file US taxes later, hoping to use the credits to reduce or eliminate my US tax obligation. Based on how long it is taking the accountant, I suspect I may need to just move ahead with the US tax return. How does this work, so that I avoid double taxation? Should I inform the accountant I will pay my US taxes and then let her know how much I paid, so that it can be considered before the German declaration is filed? 

 

Thanks in advance for any information. 

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When to File

If you are a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the U.S., on the regular due date of your return, you are allowed an automatic 2-month extension to file your return and pay any amount due without requesting an extension. For a calendar year return, the automatic 2-month extension is to June 15.

U.S. Citizens and Resident Aliens Abroad | Internal Revenue Service (irs.gov)

International Individuals | Internal Revenue Service (irs.gov)

This should help you.

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4 hours ago, mallard said:

I have income from work within Germany, as well as some from work in the US, and some investment related income due to a roth rollover.

 

Before addressing your specific questions it is important to know whether you understand US "source rules".  Were you physically present in the US when you performed the "work in the US"?  If not, your earnings were probably not US sourced.  On the other hand, if you were present in the US when performing the work, Germany might still have the right to tax you on that income unless it was earned through a US permanent establishment or if it was wage income from a US employer who bore the costs and you were physically present the US for less than 183 days. If earned in the US you won't be able to exclude it under IRC §911 but if the Germans are allowed to tax it by treaty, you can use the treaty to "resource" it as foreign for purposes of claiming the US foreign tax credit.

 

Q1.  Your extension (from May 17) to June 15 is automatic. Apart from your family and friends no one in the US government has the faintest idea where you (or any US citizen) is located or resident unless they tell their Uncle Sugar.  That said, it would behoove you to file a Form 4868 to obtain an extension of time to file until October 15.  If you expect to owe some amount of taxes when you eventually file then send a check in whatever amount you think is right along with your Form 4868 before the April 15 tax PAYMENT deadline (recently extended to May 17 due to Covid).

 

Q2. If you expect to claim the foreign tax credit on your US return for German taxes accrued (i.e. actually owed as opposed to paid) it is usually best to wait until you have your German Steuerbescheid for 2020. Second best is a Steuerermittlung computation based on your German return as filed.  Third best is to go ahead and file your US return and claim the FTC on the basis of taxes paid (e.g. Lohnsteuer, Abgeltungsteuer, Vorauszahlungen, etc.) in calendar 2020. That way you don't have to wait on your Steuerberater or the Finanzamt to find out what you actually owed. However, if the amount actually owed eventually proves to be less than the amount paid, you may have to file an amended US return to adjust the credit and/or the amount of foreign tax credit carry forwards that (normally) accrue because of the large disparity between German and US tax liability on the same income.

 

In the unlikely event you owe any US taxes it will likely be on US source income that the Germans cannot tax (but can add to your tax-rate computation, i.e. Progressionsvorbehalt) or wage or investment income which the treaty gives them the exclusive right to tax thus disqualifying it from any claim to a German foreign tax credit.  (Interest and gains earned during your German residency are taxable exclusively by Germany under the treaty so you will have to seek a credit from the US for German taxes on those items rather than the other way around.) 

 

The likeliest source of a German foreign tax credit will be from US taxes imposed on income items for which the Germans and the US share the right to tax.  In the case of US source dividends (including mutual fund distributions but not including any dividends from ADRs and ADSs), the US gets to impose a 15% maximum tax for which the Germans are obligated to grant you a credit  - not to exceed the first 15% of taxes actually owed/paid to the US on that income.  But you have to have actually paid or owe that tax and prove it. Proving you actually owed or paid any US income taxes on those dividends will be made difficult by the fact that:  a) you probably will not actually owe any such taxes b ) if you do pay them you will have to do so as computed and self-assessed on your US tax return but because c) your US tax return does not include the Capital Gains and Qualified Dividends Worksheet that is used to compute your US taxes and if you do use the worksheet you will have to separate the capital gains from the qualified dividends and then educate first your Steuerberater and then the Finanzamt on how it works - good luck with that.

 

The task of educating your Steuerberater/Finanzamt will be made difficult by the fact that a US tax return is a self-assessment, i.e. no official IRS acknowledgement of the receipt much less the accuracy of your return and (except for tax ne'er-do-wells subject to "back-up withholding"), there is no tax withholding on US investment income.  And then, because your US tax rate on dividends distinguishes between qualified and unqualified dividends and lumps the former with long-term capital gains for purposes of computing the max tax rate on capital gains/qualified dividends and lumps the latter along with short-term gains into your "ordinary income", you'll spend many a jolly hour trying to explain how you determined you paid any amount of tax to the US on your qualified and/or ordinary US dividends. 

 

NB:  If you did have dividend income from ADRs, ADSs or other third country securities (e.g. BP, UBS, TOT, BHP, TSM, etc.) you will be able to claim a FTC on BOTH your German and US returns for taxes withheld on these dividends (up to the max allowed the 3d party country under the respective tax treaty with Germany or the US; usually, but not always a maximum of 15%).  Here your task with the Germans will be a bit easier; all you need to do is show them your US 1099-DIV and show them where the foreign taxes were withheld and by which country and in what amount.

 

 

 

 

 

 

 

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Wow, thank you for the extremely thorough response. Yes, the income was US-sourced (I was in the US longer than 183 days as well, and it was not earned through a permanent establishment). 

 

I will apply for the extension as you recommended. I'm unsure how to accurately determine how much taxes I owe to send the check with this form, so I think I will reach out to a US accountant to help. In the past, when living in the US, I have only ever had quite simple tax situations and used free file software, but I think getting an accountant might be necessary for this year at least. 

 

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On second thought, a quick google search for US accountants with some knowledge of the German tax system reveals prices of $350+ minimum it seems. I'm a student and not sure I can afford that honestly, so I think I'll try and go it my own. Does anyone have advice on tax-specific message boards or places I can ask questions when they come up while I try and estimate my US tax obligation? 

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I am confused about your whereabouts in 2020.

 

You originally said 2020 was the first "full year" you were in Germany but in your follow-up you say you were in the US for longer than 183 days.

 

So before you can begin to resolve your tax reporting issues (at any price), you need to be able to answer the following preliminary questions:

 

Who are you? (US Citizen or not?)

Where were you?

When, exactly?

Why?

What were you doing there?

 

 

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Sure, sorry for the confusion. 

 

- US citizen

- I was in the US from February - October. I say "full year" because I moved to Germany in mid-2019 (for a masters program). So, 2020 was my first full-year as a German resident. My time in the US was intended to be a 1 month trip, but I first became "stuck" (no flights for several months) and then my school and student jobs were online so my trip was extended until October. 

- I continued to do my school (German University) online. I worked two part-time jobs in the US while there. I also worked two student jobs in Germany (they began while I was in US, and continued to end of the year). 

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OK.  I am beginning to get the picture.

 

As is frequently the case, tax questions relating to one year require the gathering and assessment of facts that relate to adjacent years; here:  2019 and 2021.

 

Before I get too deeply into the legal weeds on your case (and use it to instruct others similarly situated), it would be useful to have some additional information:

 

1.  Did you file a German tax return for 2019? 

      a.  if not, why not?

      b.  if so, did you file Anlage WA-ESt reporting the date of your commencement of German tax residency and the amount of income earned in the US in 2019 prior to arrival in Germany?

      c.  if so, what was the commencement date you showed on your WA-ESt?

      d.  If you filed a German tax return but not Anlage WA-ESt on what date did you physically arrive in Germany in 2019?

      e.  Between the commencement date of your German residence in 2019 and your departure in Feb. 2020, did you spend any time in the US?

 

 

2.  Your departure from Germany to the US on or after 1 Feb 2020 is potentially significant because of special Covid-19 tax relief legislation that affects the right to claim the foreign earned income exclusion under IRC §911 in 2020 only, so please confirm the exact day in February that you departed and - possibly very important:  whether you purchased a round-trip ticket, what your original return flight date was and (briefly) how Covid-19 prevented your return before November.

 

3.  Did you earn anything in Germany in January-Feb. 2020 prior to your departure?

 

4.  If you add all your wages earned in 2020 from any source plus the taxable portion of your Roth IRA and then subtract from that total the USD value of your German source earnings (in Jan-Feb and/or Nov-Dec 2020) does the result exceed your US standard deduction for 2020 ($12,400 single/$24,800 married, $18,650 HoH)?

 

5.  If you have family, did they accompany you to Germany in 2019?

 

6.  When you left the US did you retain an "abode" (the US statutory equivalent of a "Wohnsitz"), i.e. a dwelling place available to you to use despite your absence abroad or did you a) terminate a lease or b ) rent out your home so as to make it unavailable to you or your family while abroad.

 

7.  When you left Germany in Feb. 2020 did you abmelden or cancel your existing lease arrangements for your then-existing "Wohnsitz/Abode" in Germany?

 

8.  Have you spent any time during 2021 in the US and/or do you plan to visit the US for any reason between now and the end of the year?

 

If you are curious about the purport of these questions, I would recommend you go to the IRS website www.irs.gov and download Publication 54 and the instructions to Form 2555.  But, unless you're looking for "extra credit" - or you have a masochistic streak - leave Pub. 514 and Form 1116 alone for now. If you can get to $0.00 US tax liability without wrestling with the foreign tax credit, you should do so.

 

 

 

 

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Thanks very much again for taking so much time to review my details. Answers below: 

 

1. No, I did not file in Germany in 2019; my understanding was that my German tax obligation begins with my initiation of residence (I arrived end of August, 2019), and I did not have any income from that date until end of year 2019. I'm not familiar with this form WA-Est, do I need to now somehow retroactively file this? 

 

1e. Yes, I was in the US for the holidays (approx. Dec 15 2019 - Jan. 3 2020) or so. 

 

2. February 3 departure from Germany to the US. This flight on Feb. 3 was actually the return-flight from my prior flight (I had booked USA -> Germany, departure Jan. 3 2020 as mentioned in 1e, and then Germany -> USA on Feb. 3). However, I booked another flight prior to COVID restrictions to return to Germany, scheduled for April 13. This was the flight which was cancelled and resulted in me remaining in the US. 

 

3. No

 

4. Yes, it exceeds the standard deduction. One question about the source rule here, my student job with a University in Germany began while I was still in the US. Does this then count as US-sourced income? 

 

5. No one accompanied me. 

 

6. No, I was living with my parents at the time before moving, so I did not have any housing agreement to terminate or maintain. 

 

7. No, I maintained my lease in Germany throughout the time I was out of the country. 

 

8. I will likely visit the US later in 2021, but this isn't confirmed. 

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OK.  I think we have sufficient clarity on your tax residency status to draw some useful (preliminary) conclusions:

 

1.   Assuming you registered your presence in Germany back in Aug/Sep 2019 as legally required, you should have received a letter from the Bundes Zentralamt der Steuer assigning you a Steuer Identifikationsnummer.  This tax ID number will not change during your lifetime.  If and when you file a German tax return you will also have to apply for a Steuernummer at the Finanzamt that has local jurisdiction over your place of residence.  I do not know if filing a return in 2019 was mandatory but I would GUESS that in the absence of any WORLDWIDE taxable income earned after your commencement date of tax residency you PROBABLY had no German filing requirement.

 

2.  I have not counted the days but it seems clear that from the time of your arrival on xx/xx/2019 to the date of your Departure to the US on Feb 3, you were not physically present in Germany for the 180 days during the 1 year that elapsed on the anniversary of your arrival in xx/xx/2020.  Nevertheless, you would likely still be regarded as having acquired German tax residence effective xx/xx/2019 under either § 8 or § 9 - or both - of the German Fiscal Code (AO). Your physical presence began with an intent to remain for at least 180 days but that intent was frustrated by circumstances beyond your control. When the circumstances ceased to apply, you resumed that residence/physical presence. In addition, you established a Wohnsitz (abode) in 2019 and maintained it continuously after that date and throughout your period of enforced absence.  Nor did you acquire a new abode in the USA during that time.  So it seems clear to me that you were a German tax resident for the entirety of 2020 and "subject to" German taxation on your worldwide income.

 

3.  "Subject to" taxation is not the same thing as "actually taxed".  Of the items of income you have mentioned only the portion of your wages earned after your physical return to Germany in Nov 2020 and the earnings portion of your Roth IRA distribution would be directly taxable by Germany in 2020.  The tax rate applicable to your German wage income would be computed by adding the wages earned in the US that Germany cannot tax (under Art. 15 of the Tax Treaty).  The earnings portion of your Roth IRA distribution would be taxed as Kapitalerträge and thus eligible for the annual €801 exclusion.  To the extent the Roth income exceeds that, the applicable tax rate would be the lower of your ordinary income tax rate or the 25% maximum Abgeltungsteuer.

 

 

4. Your US taxes:

 

a. Your income earned while present in the US in 2020 - including services performed for your German employer - does not qualify for the Foreign Earned Income exclusion.  Since the US has the exclusive right under the treaty to tax that income and as noted above Germany will not (directly) tax that income, you cannot claim a foreign tax credit to offset whatever US tax liability is allocable to that income.

 

b. Your German earned income, however, is, or will be excludable under §911 (FEI) under one or both of the following theories:

   i. Your "abode" was in Germany as was your "tax home" throughout 2020 so regardless of your lack of physical presence there (due to circumstances you could not control) you were a "bona fide resident" for purposes of §911

   ii.  Despite your lengthy period of physical presence in the US, the Covid 19 relief legislation may allow you to "pretend" that you were still in Germany for purposes of meeting the "physical presence" test under §911.  You departed Germany after 1 Feb. (the qualifying date under the Covid relief rule) and you can demonstrate that your continued presence thereafter - or at least after April - was due to Covid.   In addition, even if the special Covid rule were deemed not to apply to you, if you stay in Germany for at least 330 days commencing on the date of your return in November 2020 you will be able to "retroactively" qualify the income earned in Germany in 2020 for the FEI exclusion.  Your "qualifying 365-day period" could begin 35 days prior to your return to Germany and end 330 days after that, i.e. sometime in the Fall of 2021.

 

c.  Your taxable Roth income is the difficult part especially if you took only a partial non-qualified distribution. The US tax rules and the German rules computing the taxable portion will be the same if you withdrew the whole shebang: 

 

Total distribution - contributions = taxable income portion in both Germany and the US.

 

If you took less than a total distribution of your Roth, then you will have to contend with different rules concerning the computation of the taxable portion.  The US uses "ordering rules" that allow you to first recover the entirety of your non-taxable contributions before reaching the earnings portion.  In Germany, however, the taxable portion will be computed as an allocable portion of any distribution; very similar if not identical to the procedure used in the US to compute the non-taxable portion of a distribution from a traditional IRA with "basis", i.e. non-deductible contributions.  (See Form 8606 for details.)

 

d.  Under the treaty Germany has the exclusive right to tax your IRA distribution according to its rules.  Because of this, you would be subject to double taxation: by Germany on the basis of your residence and by the US on the basis of your citizenship.  Moreover, because the IRA distribution was US-sourced income you would - absent the treaty - be ineligible to claim any credit for German taxes paid on the IRA distribution.  However, Article 23 of the treaty provides for such income to be "re-sourced foreign" so as to avoid double taxation.  This means that despite its US source under US source rules, your Roth IRA distribution will be considered "German sourced" for purposes of allowing you to claim a foreign tax credit for whatever the Germans hit you with on that income.

 

 

Here is what I suggest you do:

 

Go the IRS web site and find a "free file" participant (I recommend OLT).  Use their software to complete your US tax return. They have all the forms you will require (8606, 2555, 1116, etc.)  OLT will even allow you to save .pdf copies of your work off line even if you don't file a return with them. They will also allow you to file a Form 4868 extension electronically even if you are ineligible to file your main return with them electronically because your AGI does not exceed $16,000.

 

After excluding your Nov/Dec German income on Form 2555 (and before computing whatever amounts of your Recovery Rebate you may still have coming to you) what kind of US tax liability are you looking at?

 

How much of that liability is attributable to your non-qualified Roth IRA distributions as opposed to your US earnings?

 

A bunch?

 

A piddling amount?

 

If the latter, you may want to consider whether it is worth the time (and possible expense) of trying to eliminate that "piddling amount" by completing a Form 1116 and claiming the foreign tax credit.

 

If the former, then you will have to graduate to the big-time complexity of Form 1116, Pub 514 and all the horrors that await you there.

 

 

 

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Thanks again. I will be working on preparing the filing with OLT this evening and into tomorrow if necessary, and will post back with answers to the questions. 

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Okay, so I ran through OLT, which further reinforced my feeling that I'll need to hire a professional to file my US taxes in the end, because there's many questions I was uncertain about. But, it gave me some baseline feeling for what I owe: To answer your final question first, it seems the roth conversion will be the largest portion of tax I owe, and ends up resulting in a $500 tax bill. Without this, I would instead get a small refund. So, it may be worthwhile for me to pursue the more complicated 1116 to claim the FTC (with the help of an accountant perhaps). 

 

Responding to a few of your specific points: 

 

On 4/8/2021, 4:42:01, Straightpoop said:

3.  "Subject to" taxation is not the same thing as "actually taxed".  Of the items of income you have mentioned only the portion of your wages earned after your physical return to Germany in Nov 2020 and the earnings portion of your Roth IRA distribution would be directly taxable by Germany in 2020.  The tax rate applicable to your German wage income would be computed by adding the wages earned in the US that Germany cannot tax (under Art. 15 of the Tax Treaty).  The earnings portion of your Roth IRA distribution would be taxed as Kapitalerträge and thus eligible for the annual €801 exclusion.  To the extent the Roth income exceeds that, the applicable tax rate would be the lower of your ordinary income tax rate or the 25% maximum Abgeltungsteuer.

 

 

Thank you for this clarification. So, to determine the taxable amount of my Roth conversion, I should calculate the difference between the total contributions into the traditional IRA and the end amount that was withdrawn and put into the roth IRA (equal to the earnings, then)? I talked to my Steuerberater and they didn't seem to realize this and were instead considering the entire amount. I will touch base with them to clarify the amount that is earnings vs. the contributions put in. 

 

Also, in case I am using some personal finance terminology incorrectly, I want to be clear about what I did: 

- My prior employer in the US always contributed some of my paycheck into a traditional IRA. They also contributed annual profit sharing amounts into this same account. I never made any additional contributions to this account, so my understanding is that all of these contributions were pre-tax, and the entire balance that was in the traditional 401k was not taxed yet. In 2020, I converted the entire amount into that accounted into my existing roth IRA account. 

 

On 4/8/2021, 4:42:01, Straightpoop said:

4. Your US taxes:

 

b. Your German earned income, however, is, or will be excludable under §911 (FEI) under one or both of the following theories:

   i. Your "abode" was in Germany as was your "tax home" throughout 2020 so regardless of your lack of physical presence there (due to circumstances you could not control) you were a "bona fide resident" for purposes of §911

   ii.  Despite your lengthy period of physical presence in the US, the Covid 19 relief legislation may allow you to "pretend" that you were still in Germany for purposes of meeting the "physical presence" test under §911.  You departed Germany after 1 Feb. (the qualifying date under the Covid relief rule) and you can demonstrate that your continued presence thereafter - or at least after April - was due to Covid.   In addition, even if the special Covid rule were deemed not to apply to you, if you stay in Germany for at least 330 days commencing on the date of your return in November 2020 you will be able to "retroactively" qualify the income earned in Germany in 2020 for the FEI exclusion.  Your "qualifying 365-day period" could begin 35 days prior to your return to Germany and end 330 days after that, i.e. sometime in the Fall of 2021.

 

 

I agree with your assessment that I could probably be eligible under both theories. To me, the bona fide approach is less complicated and equally valid, since my move to Germany was not a temporary one. However, when I fill out this section on form 2555, it asks me to indicate my trips to the US, as well as how many days I was in the US "for business" and my earnings made in the US "for business." I think this is intended to refer to people who's employer in Germany has them working in the US, not necessarily someone in my situation who returned to the US not intending to work, and wound up staying due to the pandemic and getting some part time work. So, I'm not sure whether to list my earnings and trip dates for my time in the US in 2020. I also noticed form 2555 only lets you specify one employer in Germany, while I had two in 2020. 

 

On 4/8/2021, 4:42:01, Straightpoop said:

c.  Your taxable Roth income is the difficult part especially if you took only a partial non-qualified distribution. The US tax rules and the German rules computing the taxable portion will be the same if you withdrew the whole shebang: 

 

Total distribution - contributions = taxable income portion in both Germany and the US.

 

If you took less than a total distribution of your Roth, then you will have to contend with different rules concerning the computation of the taxable portion.  The US uses "ordering rules" that allow you to first recover the entirety of your non-taxable contributions before reaching the earnings portion.  In Germany, however, the taxable portion will be computed as an allocable portion of any distribution; very similar if not identical to the procedure used in the US to compute the non-taxable portion of a distribution from a traditional IRA with "basis", i.e. non-deductible contributions.  (See Form 8606 for details.)

 

 

I think determining my taxable Roth income is simple in my case. I simply moved all the money my employer had contributed to a traditional IRA into my (already existing) roth IRA. None of the money in the traditional IRA had been taxed yet, so I understand that the full distribution amount is to be taxed. Am I misunderstanding this? I don't think the contribution amounts are relevant, since they were all by my employer and pre-tax. 

 

One more question regarding general procedure: I plan to file the form 4868 sometime before May 17 to get the extension to file my US taxes. When I do this, it is best to send the check (e.g., for $500 based on my current approximation) for the amount I think I will owe, correct? I assume if I actually end up owing less than this amount, they will refund the difference? But making this payment seems it should help me avoid paying interest on any amount (of $500 or less) that I may owe the IRS. 

 

Sorry for so many questions, I feel a bit in over my head, but your analysis has helped me clarify things a lot.

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I think your tax situation - US and German - is a lot simpler than I originally believed.

 

In your original post you referred to a "Roth rollover".

 

I did not read that carefully and managed to misread it as referring to a "Roth withdrawal" which I then further mentally distorted and referred to as a "Roth IRA distribution", i.e. an unqualified "distribution" from a Roth IRA that would trigger tax consequences in both the US and Germany.

 

I now know from your latest post that this may have been wrong.  You apparently did not have an IRA "distribution" of any kind in 2020.  Rather, you had a simultaneous rollover and conversion of a traditional IRA/401(k) into a preexisting Roth IRA and apparently - please confirm this - those funds remained in the Roth IRA and you took no distribution from the Roth in 2020.

 

Although the conversion aspect of the rollover/conversion transaction was a tax event in the USA, in my opinion Art 18A (1) of the tax treaty makes it a non-event for German tax purposes because it did not involve a "distribution" to you out of a pension plan. 

 

There is no serious question that a simple rollover from one kind of treaty qualified IRA to another (especially a "trustee-to-trustee" rollover) is not a distribution. (There might be an argument if the rollover involved a distribution followed by a qualified rollover within 60 days as allowed in the US; hopefully, that was not the case in your situation.) 

 

A conversion from a traditional IRA to a Roth has tax consequences in the US because of the tax-deferral enjoyed by the original 401(k)/traditional IRA contributions and the income they subsequently earned while within the IRA. But, if those contributions had been originally made to a Roth from post-tax earnings they and their earnings would still be tax deferred under Art. 18A until actually "distributed" and even then only the earnings portion - and not the contribution portion - would be taxable in Germany. 

 

There is in my view no legal, logical or economic merit to the argument that a mere change in the nature of one type of non-taxable (in Germany) contribution to another should somehow trigger tax liability for the income portion included in the rollover/conversion in the absence of an actual distribution.  If you were to take a distribution from a Roth IRA while still tax resident in Germany, you would still be taxable only on the earnings portion - to include any earnings rolled over from your traditional IRA - but not on any original contributions to either the traditional/401(k) or Roth IRA's made before you became a German tax resident.

 

If your Steuerberater needs help understanding all of this please refer him or her to the following guidance from the OFD Karlruhe:

 

https://datenbank.nwb.de/Dokument/Anzeigen/449077/

 

 

So . . . .

 

If your description of a conversion/rollover is complete and accurate (i.e. you took no distribution from any IRA) your most important task will be to convince your German steuerberater that your 2020 German tax return should make no mention of your IRA transactions of any kind because they are of no tax relevance in Germany.  (Again, if the rollover was not a trustee-to-trustee rollover, then, as Ricky used to say to Lucy:  "You got some 'splainin' to do" because Germany would not necessarily be bound by the US "60-day qualified rollover" rules).

 

 

If that is the case your German tax return should include the following forms:

 

1. Mantelbogen

2. Anlage N (your German source wage income)

3. Anlage N-AUS (your US source wage income)

 

Assuming you exclude your German wage income, you will therefore have no German taxes (if any at all) that can be allocated to the US tax imposed on your Roth rollover/conversion and thus no need to mess with foreign tax credits and Form 1116.

 

The bad news is that by doing a complete rollover/conversion all in one year you maximized your 2020 US tax liability.  Simply by spreading the conversion out over multiple years you would have been able to greatly reduce or even eliminate the US tax consequences of the conversion/rollover.

 

 

 

As to your "housekeeping" questions:

 

1.  Do send a check with your Form 4868 (or go the IRS web site and arrange for a direct debit from a US bank account).  This will eliminate any penalties or interest on late payment if you can't get your US return filed before the (extended) October 15 filing deadline.

 

2.  I would appear that your AGI in 2020 is greater than 16,000 and less than 70,000 so you will apparently qualify for free efiling through OLT.

 

3.  On Form 2555 do include your dates of all physical presence in the US in 2020 (It will raise questions about your § 911 eligibility but you must do it.)

 

4.  On Form 2555 indicate all the days you worked in the US - regardless of the identity of your employer - as "days on business" and show the US employer and the allocable portion of German employer salary earned

 

5.  If you had 2 German employers, simply file 2 Forms 2555.  If the software won't allow you 2 forms, try to cram both employers' names on the form and give the address of the one that paid you the most and total the amounts received from both on a single form.

 

6.  If OLT's software allows it be sure to add the following to the top margin of your Form 2555:   "Revenue Procedure 2020-27"   This refers to the Covid-19 relief legislation that may or may not be applicable to you for qualifying under either the "bona fide residence" or "physical presence" test. 

 

HINT:  if you'll owe money and you've paid that in advance, there will be no hurry in actually filing your return.  You can wait until September 2021 when you have clearly qualified your 2020 German earned income under the physical presence test and then send it in on paper if you cannot efile.

 

HINT:  If your German jobs were so-called minijobs and you were "pauschalierte besteuert" you may not have any German income to report and possibly not even a German tax filing obligation.

 

 

 

 

 

 

 

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Great, thank you so much. You have clarified so many issues, I think I'm now all set to proceed. I wish I could somehow return the favor for all the effort you put in to explaining this, thanks a million. 

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