<p>I have come to know this all very recently</p>
<p>My dad owns a rental property in India that is rented to a person (without any written documents) at about 130 dollars a month. Now, we live in the United States as permanent residents and did not know that we had to report the property as well as the rental income for tax purposes (all based on what i have read)</p>
<p>I reported the value of the property in the profile but did not report rental income because based on last year's tax report, there is no rental incomes. If my parents report the property now, based on what I have read, they will have to pay hefty fines.</p>
<p>I doubt that a college will find this out but am really scared that if I do not report it somehow that my college process will be ruined as well as getting rescinded from every school I apply to. I do not know what to do. I really don't. I can't believe I have to pay for my parents' mistakes. I love them so much, but this is just heartbreaking.</p>
<p>$130/month is, um, nothing. Probably they can easily say they have expenses associated with renting the house that are nearly that much, especially if they are managing it from the US (i.e. they pay someone else to manage it). Hopefully they will file the correct forms for this year, but I really doubt that this is a big deal.</p>
<p>but i cannot help but thinking that this could be grounds for revoking admission and forcing me to pay back every cent that i have gotten. I have read that the college could take away a degree for something like this…</p>
<p>It really is, all things considered, a trivial amount. But, when you update your Profile for this year, after your parents have filed their 2012 taxes, add in the correct amount of income. Also, make sure they include it in their 2012 tax return. Problem solved.</p>
<p>The amount is little enough that it shouldn’t be a big problem for the years that it wasn’t reported. If the IRS notices, I wouldn’t imagine there’d be anything more than a very small penalty. Don’t worry about it.</p>
<p>Your parents can read up on how to file amended tax forms (1040x) for previous years, and on the amount of tax and any penalties that might be owed to the IRS for those years at [Internal</a> Revenue Service](<a href=“http://www.irs.gov%5DInternal”>http://www.irs.gov) That way they will be able to make a decision about how to handle previous tax years.</p>
<p>I’ve had to file amended forms a number of times, and the penalties (in my case) were never onerous. Probably because the amounts owed were pretty small.</p>
<p>Your parents should be reporting the income from the rental, and international assets on their tax return. That does not mean they would end up with higher income or higher taxes. In fact, it is very possible, given the small amount of income it is generating, that it will result in a net loss, and a tax refund. If it does, it would most likely result in a lower EFC rather than higher. As far as CSS, you already reported the asset, so it should have minimal impact. Even if there were no expenses, you’re talking about about $1500 income.</p>
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<p>Foreign real estate owned directly (as opposed to through a foreign entity) isn’t required to be disclosed either on a TDF 90-22.1 (FBAR) or on a Form 8938, per [Comparison</a> of Form 8938 and FBAR Requirements](<a href=“http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements]Comparison”>http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements) So the “you pay half the value of the property in penalties, on top of the normal tax and interest and penalties, and hope you don’t go to jail for very long” element likely isn’t an issue here.</p>
<p>My advice would still be to visit with a tax attorney regarding the best way to amend the back tax returns to properly report the income. A competent CPA will tell you to shut up and see an attorney the moment you say “unreported foreign,” because the attorney (unlike a CPA or any other tax preparer) can’t be compelled to testify against you in court. It’s likely that the attorney will tell you there’s no criminal exposure and will refer you to someone to amend the tax returns, but I’m not an attorney, and I can’t tell you that.</p>
<p>If there’s a foreign bank account that exceeded $10k at any point since your parents became permanent residents (a term of art for tax purposes, which may or may not coincide with its meaning for immigration purposes), and it hasn’t been properly disclosed, none of the above applies, except for the “shut up and see an attorney” part. </p>
<p>(For all the people saying that amending is not a big deal, unreported foreign-source income can be an enormous deal. It is not at all the same thing as unreported US-source income in terms of potential consequences.)</p>
<p>It goes without saying that the 2012 returns should be prepared correctly. I do agree that the Profile, based on a correct and complete 2012 return, should not create any issue for you, the student.</p>
<p>Yes, this is foreign source income, but it would be reported on Schedule E, and any expenses would be claimed against it. As a foreign rental property, it would also be depreciated over 40 years. The net result is likely to be a loss, not unreported taxable income.</p>
<p>Foreign issues have significant exposure without regard to the impact on taxable income. (I’d also be wary of concluding that the rental will have a loss, in the absence of any information beyond gross rents.)</p>