Navigating Germany/US Double Taxation Treaty - Rental Income and Employment Questions

The US-Germany tax treaty exists specifically to address situations like yours and prevent double taxation. The key points you need to understand: For your US employment income earned while physically in the US, that income is primarily taxable in the US. Germany may include it in calculating your tax rate (exemption with progression), but you shouldn't be double-taxed on it. For your rental property income from the US, this is typically taxable in both countries, but you can claim a foreign tax credit in either country to offset taxes paid to the other. As a US citizen, you must file US tax returns reporting your worldwide income, but you can use the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credits to reduce or eliminate US tax on your German income. You absolutely can handle this yourself with the right software, though it's more complex than a standard return. Look for tax software with international/expat features or consider a more reasonably priced expat tax service (many charge $300-600 for a return with this complexity).

I was in a similar situation last year and found incredible help using https://taxr.ai to decipher my tax treaty options. I was honestly clueless about the US-Germany tax treaty and how to apply foreign tax credits properly. The tool analyzed my specific situation with rental income from the US while living in Germany and gave me crystal clear guidance on which forms to use where. It saved me at least €2000 compared to the quotes I was getting from international tax specialists. The system literally showed me exactly how to fill out Form 1116 for the US and the equivalent German forms. It even identified deductions for my rental property I hadn't considered.

Just wanted to follow up - I actually tried https://taxr.ai after my initial skepticism, and it was legitimately helpful. It identified that I had been calculating my tax residency incorrectly under the US-Germany treaty (I didn't realize the 183-day test spans different periods depending on which article applies). The system guided me through applying Article 23 paragraph 3 specifically for my situation. It even helped me determine which exchange rate methodology to use for converting my rental income. I ended up handling both my US and German returns myself, saving around €3800 in preparer fees. The documentation it generated made it easy to ensure I was applying the treaty correctly.

After struggling with the IRS for weeks trying to get clarity on how the US-Germany tax treaty applied to my similar situation, I finally found a solution with https://claimyr.com - they got me through to an actual IRS international tax specialist in under 20 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS specialist confirmed that I needed to file Form 8833 (Treaty-Based Return Position Disclosure) along with my Form 1116 to properly claim treaty benefits for my German income. She also clarified exactly how to handle the rental income reporting so I didn't get double-taxed. I was honestly shocked at how helpful the IRS person was once I actually got through to them.

I have to admit I was completely wrong. After my skeptical comment, I tried https://claimyr.com out of desperation. After months of trying to reach someone at the IRS about my US-Germany tax situation, I got connected to an actual international tax specialist in about 35 minutes. The agent walked me through exactly how to claim treaty benefits for my situation and confirmed I needed to file Form 8833 along with my 1040. She even emailed me the specific IRS publication sections relevant to rental income under the US-Germany treaty. This saved me from making a serious mistake on my return - I had been applying the wrong treaty article to my rental income. Having the conversation documented also gives me something to reference if I'm ever questioned about my treaty position.

Don't overlook state taxes in this situation! The US-Germany tax treaty is federal only. Depending on your last state of residence, you might still have state tax obligations on your worldwide income until you fully establish non-residency. I learned this the hard way after leaving California for Germany. California considered me a resident for the full year I left because I didn't properly sever my ties (kept my CA driver's license and voter registration). Cost me thousands in unexpected state taxes that weren't covered by any foreign tax credits.

Has anyone used TurboTax or similar software to handle this kind of international situation? I'm in almost the exact same boat (moved to Germany in 2023, have US rental property) and wondering if regular tax software can handle the complexity or if I need something specialized.

I'm dealing with a very similar situation - moved to Germany in late 2023 and have been struggling with understanding how the tax treaty applies to my US rental income. From what I've researched, the key is that rental income from US property remains primarily taxable in the US under Article 6 of the treaty, but Germany will still include it in your worldwide income calculation. One thing I learned that might help: make sure you're properly calculating your German tax residency date. If you moved in September 2023, you likely became a German tax resident immediately upon arrival with intention to stay permanently. This affects how much of your 2023 income Germany will want to tax. For the rental property, you'll need to report it on both returns but can claim foreign tax credits to avoid double taxation. The German tax advisor's quote does seem excessive - I've seen quotes ranging from €800-1500 for similar complexity. Have you considered getting a second opinion from another German Steuerberater? Also, don't forget about depreciation on your rental property - you can claim it in both countries, which can significantly reduce your taxable rental income.