Many United States citizens and resident aliens receive money from
foreign sources. These taxpayers must remember that they must report
all such income on their tax return, unless it is exempt under federal
law.
U.S. citizens and residents are taxed on their worldwide income.
This applies whether a person lives inside or outside the United
States. Foreign income must be reported on a U.S. tax
return whether or not the person receives a Form W-2, Wage and Tax
Statement, a Form 1099 (information return) or the foreign equivalent
of those forms.
Foreign source income includes but is not limited to earned and unearned income, such as:
- Wages and tips
- Interest
- Dividends
- Capital Gains
- Pensions
- Rents
- Royalties.
An important point to remember is that individuals living outside
the U.S. may be able to exclude up to $85,700 of their 2007 foreign
earned income if they meet certain requirements. However, the foreign
earned income exclusion does not apply to payments made by the U.S.
government to its civilian or military employees living outside the
U.S.
For more information, check out IRS Publication 54, Tax Guide for
U.S. Citizens and Resident Aliens Abroad. It’s available on the IRS Web
site at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Remember that for the genuine IRS Web site be sure to use
.gov. Don't be confused by internet sites that end in .com, .net,
.org or other designations instead of .gov. The address of the official
IRS governmental Web site is www.irs.gov.
