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foreign income, has to be declared? is it taxable here in US?
I have brought to the states money, via bank transfer; this money is to support my family, the amount is around 5 times the income my wife and I have done here in US in this 2009; this income is derived from savings and business derived profits, and, of course, it has paid income tax locally in my country. The question is, do I have to report this money to the IRS? should I consider it taxable income? and, what are the risks of not reporting it, if it's mandatory to do it? I'll appreciate any knowledgeable advice
4 Answers
- JssLv 71 decade agoFavorite Answer
On your return, you MUST report your world wide income. If you paid taxes in the foreign country, you will claim credit for taxes paid in the foreign country by filing Form 1116 or can file form 2555 Foreign Earned Income Exclusion. Even if you have a filing requirement, the chances are you will not pay any U.S. tax or pay very little U.S. tax.
Another filing requirement is Form TD F 90-22.1.
- Anonymous5 years ago
You're self-employed, so the income and deductions are most definitely reported on a T2125. The net result is written on your return at line 135. When it comes to the income taxes paid in the states, there is a tax treaty between us and the US that basically prevents double taxation of your profit. However, the US probably has first crack because that's where you earned your income. Fill in a form T2209 in order to claim foreign tax credits. In addition, you may need a form T2203 in order to avoid paying provincial taxes on the amounts of income if your business was permanentlt established outside the country.
- StephenWeinsteinLv 71 decade ago
If you were neither a U.S. citizen nor a U.S. permanent resident when you earned the money, then you are not required to pay tax on the money. You may be required to report it for other persons, such as to document that it is not drug money.
All money earned by citizens and permanent residents of the U.S., anywhere in the world, is taxable here in the U.S., even if it is left in the foreign country and is not brought to the U.S.
In both cases, there are no U.S. tax implications to moving the money from one country to another. The taxability of the income is determined by when and where you earn it, not what you do after that.
- Anonymous1 decade ago
If you are a US citizen or resident alien, you report current year income on your US tax return. The taxes you paid in the other country are deductible/creditible to reduce the impact of double taxation.
If you are a US citizen or resident alien, you are also required to report foreign bank accounts with more than $10,000 in them.
If you are non-resident or you have done both of the above, it's a non issue to bring in your own money.
