I have never dealt with Guam.
Do I show it on the client?s 1040 as a regular Schedule E rental and subject to fed tax just like all other income, or is there anything special because it?s located in Guam?
Same question re: CA 540 ? the client is a CA resident and does not spend any time in Guam.
Please share what you know to help me out.
Thank you,
Maria U. Ku, CPA Oakland, CA
There is no federal income tax in US territories, but there is a Guam income tax that is the same as what the federal tax would have been. According to IRS Pub 570, rental income from property located in Guam is Guam source income, which suggests that it's subject to Guam income tax. Form 570 says that your US resident client pays tax to the US and you include Form 5074 and report the rental income on line 11 so they can allocate the tax between the US and Guam.
Form 570 offers this not very clear description of what you do:
It's probably worth paying a Guam tax expert one time to tell you what gets paid and/or credited where.
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