Scottsdale CPA | Foreign Income

US citizens or residents who work abroad and receive income from a foreign source have some different tax rules they need to be aware of. Here a few tips regarding foreign earned income that all taxpayers should be aware of.

1. By law, US citizens and residents must report their worldwide income. This includes income from foreign trusts and foreign bank and securities accounts.
2. You may need to file a form Schedule B, Interest and Ordinary Dividends with your US income tax return. You may also find it necessary to file form 8938, Statement of Specified Foreign Financial Assets depending on the types of foreign income earned.
3. If you a living and working in a foreign country, you may able to exclude some or all of your income by claiming the foreign earned income exclusion. If you qualify, you will be able to exclude up to $99,200 from your income tax return. You would use form 2555, Foreign Earned Income to exclude this income from your tax return.
4. You may also be entitled to a tax credit or deduction for income tax you paid to any foreign country. These can help to reduce your tax liability if both countries have taxed the same income.
5. If you lived outside the United States and are unable to file your income tax return by the April 15th deadline, you may qualify for an automatic two month extension of time to file. That will give you until June 16th to file your income tax return. This extension applies to those serving in the military outside the United States. You will be required to attach a statement to your income tax return explaining how you qualify for the automatic extension.

If you have questions or would like additional information, please contact us at Dusseau & Makris, PC, your Phoenix CPA firm.