REPORTING FOREIGN SOURCED INCOME
March 17, 2022 - Douglas Myser
Reporting foreign sourced income. With the need for more revenue, due to the once in a life time health pandemic, the U.S. Government is cracking down on anyone who avoids foreign sources of income. They were alerted to schemes to hide income, by the revelations of the Panama Papers, and the ridicule it caused the government during the Covid crisis as some members caught cheating the IRS were politicians. So to be clear, a citizen of the U.S. or resident alien worldwide who has foreign income is subject to U.S. income tax, no matter where in the world they live. They also have to file taxes, just like regular citizens do. Reporting foreign sourced income.
U.S. citizens and resident aliens must report unearned income, such as interest, dividends, and pensions, from sources outside the U.S., unless exempt by United States law or a tax treaty. They must also report earned income, such as wages and tips, from sources outside the U.S. A tax filing requirement applies if a taxpayer qualifies for tax benefits, such as Foreign Earned Income Exclusion, or the Foreign Tax Credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are available if an eligible taxpayer files a income tax returns. A taxpayer is allowed an automatic 2 months extension to June 15th if both their tax home and abode are outside the U.S. and Puerto Rico. Even if allowed an extension, a taxpayer will have to pay interest on any tax not paid by the regular due date of April 15th, 2022. Any questions about filing taxes when living outside of the United States can be found at the Internal Revenue's Website, IRS.GOV
If you lived overseas and incurred a tax debt, or a IRS Wage Garnishment, and want to explore options for Tax Resolution, including the IRS Fresh Start Program, check the back links for helpful Professional Tax Advice.