How To Report Foreign Income Without W2

You can live or work abroad but if you are a US citizen or permanent legal resident. Even if you reside outside the United States.  And receive income from a source located outside the United States you must report that income. So now will talk about how to report foreign income without W2.

Depending on your circumstances you may have to pay taxes to both the government.  Where the company from which you earned your income and the Internal Revenue Service are located. However, in some cases you can receive tax credits or tax exclusions for some or all of your foreign income. The details of reporting foreign income vary according to individual circumstances. However, there are general guidelines for almost everyone who receives foreign income.

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Tax credit for foreign income

If the country from which you get your income applies taxes and that country has established a tax treaty with the US. You may be able to claim the Tax Credit for foreign income. The expected net result of the tax credit is to ensure that the total income tax you pay is no more than the highest result you would have paid to a single government.

If you hire an accountant or a tax lawyer to calculate your taxes, he or she will undoubtedly apply for the Foreign Income Tax Credit on your tax return. Some tax preparation software programs also include provisions to calculate the Foreign Income Tax Credit, if applicable. If not, choose a different tax preparation program.


Exclusion of income earned abroad

Do not confuse the Foreigner Income Exclusion with the Foreign Income Tax Credit. The Foreign Labor Income Exclusion is designed to allow US citizens and legal residents residing outside the country to exclude most or all of the income earned from foreign sources from their federal tax liability. The amount of the exclusion varies each year; for 2013, the maximum exclusion was $ 97,600 per individual taxpayer. Married couples could possibly claim greater exclusion.
The Internal Revenue Service has established strict guidelines for taxpayers who wish to claim the Exclusion of Foreign Labor Income for a given fiscal year. Taxpayers must comply with all the guidelines listed below to qualify for exclusion.

  • Must have earned income abroad
  • You must have established a tax house in a foreign country
  • You must pass the residency test in good faith or the physical presence test

Proof of residence in good faith requires that you be a resident of good faith in a foreign country for a period that includes at least one full fiscal year. The physical presence test requires that you be physically present in that foreign country for at least 330 days during a single 12 month period. However, you do not need to be present for 330 consecutive days.


US government employees Existing abroad

Income earned by U.S government employees including active duty military personnel does not qualify for the Foreign Income Credit.  Or for the Exclusion of Foreign Labor Income Tax even if the income was earned abroad . However spouses of government employees who earn income from foreign sources may be eligible for credit or income exclusion. It is necessary to consult with a lawyer or accountant who specializes.  In this issue with specific questions about your particular circumstances.


Foreign income earned while existing in the United States

If you reside within the United States full-time, in most cases, you must report income earned from foreign sources on your federal tax return, even if the foreign government taxes them with that income. This requirement refers to income earned and not earned. Self-employed workers who earn income from foreign clients must also report their foreign earnings on their federal income tax returns.


No W2 or Form 1099?

The requirement to report a foreign income applies even if you do not receive Form W2, Form 1099 or an equivalent form from the source of foreign income. It is your responsibility to provide an accurate calculation of your income by calculating payments of salary receipts, bank transfer records, dividend reports, bank statements or monthly PayPal statements.
When calculating your foreign income, you must combine it with any national income you have earned to calculate the adjusted gross income that will be included in your federal income tax return. Not reporting foreign income is considered a tax evasion, and if caught, the consequences can be serious. It can be hit with high fines or even imprisonment.


Before you go, I hope this content how to report foreign income without W2 is helpful for you. If you need help from a tax expert Contact Us today.





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