I'm not qualified to answer your questions, but note that the U.S. doesn't really consider you a tax resident or not, they tax citizen's worldwide income. You can avoid some tax via the Foreign Earned Income Exclusion in some cases (I don't know if your scholarship would count or not) up to a certain amount, or you can claim the Foreign Tax Credit on income tax paid to another country but only sometimes.
The Foreign Tax Credit happens on Form 1116. It's a complicated form and I haven't filled it out in a real situation, but as I understand it (which could be wrong), it only lets you take a credit for foreign taxes paid on foreign sourced income. Rent on property located in the U.S. is considered U.S. sourced income as are dividends paid by U.S. based companies. Tax paid a foreign county on things like income earned/paid while living in a foreign country, capital gains realized (I think) while living in a foreign country, and dividends from foreign company would be able to count for the foreign tax credit, as I understand it.
Furthermore, the tax credit can only be counted against income in the same category based on the checkboxes at the top of Form 1116. So for example, foreign tax on Passive Category Income (rental income, dividends, and capital gains) couldn't count against U.S. tax on General Category Income (like earned income).
Hopefully Spain also has some form of foreign tax credit so you don't get taxed fully by both countries on your U.S. sourced income.
I hope my reply gets someone more qualified to see this thread so they can give you a more complete and definitive answer, but based on my limited understanding I think it's likely you'll end up paying quite a bit of tax on most of your income, and only avoid double taxation if it happens on the Spanish tax forms. I don't think the U.S. Foreign Tax Credit is going to help you much.
The Foreign Tax Credit happens on Form 1116. It's a complicated form and I haven't filled it out in a real situation, but as I understand it (which could be wrong), it only lets you take a credit for foreign taxes paid on foreign sourced income. Rent on property located in the U.S. is considered U.S. sourced income as are dividends paid by U.S. based companies. Tax paid a foreign county on things like income earned/paid while living in a foreign country, capital gains realized (I think) while living in a foreign country, and dividends from foreign company would be able to count for the foreign tax credit, as I understand it.
Furthermore, the tax credit can only be counted against income in the same category based on the checkboxes at the top of Form 1116. So for example, foreign tax on Passive Category Income (rental income, dividends, and capital gains) couldn't count against U.S. tax on General Category Income (like earned income).
Hopefully Spain also has some form of foreign tax credit so you don't get taxed fully by both countries on your U.S. sourced income.
I hope my reply gets someone more qualified to see this thread so they can give you a more complete and definitive answer, but based on my limited understanding I think it's likely you'll end up paying quite a bit of tax on most of your income, and only avoid double taxation if it happens on the Spanish tax forms. I don't think the U.S. Foreign Tax Credit is going to help you much.
Statistics: Posted by terran — Thu Nov 21, 2024 6:30 am