Living and working outside the U.S.? Your foreign income still needs to be reported on your annual U.S. tax return.
Foreign Earned Income
As the U.S. is one of the few countries that taxes based on whether or not a taxpayer meets the definition of a U.S. person, any U.S. citizen or green card holder (along with other special circumstances), will be required to report their worldwide income to the IRS for each year their is a filing requirement.
Fortunately, the IRS provides different mechanisms to ensure that this foreign income is not double taxed. It must be reported to the IRS, but it is often offset by either the Foreign Earned Income Exclusion (FEIE), or the Foreign Tax Credit (FTC). Any income not offset by either the FEIE, FTC, or combination of the two will be taxed in the U.S. at the prescribed rates for the tax year in question.
Ask about our new client promotions today!
Any tax advice herein is based on the facts provided to us and on our interpretation of tax legislation as it reads at the time the advice is provided. Tax law is subject to continual change, at times on a retroactive basis and may result in incremental taxes, interest or penalties. We are not responsible for updating our advice for changes in law or interpretation after the date the advice is provided. Every tax situation is different. We are not responsible for the tax implications to any individual or entity that may act on this advice.