Us Taxable Income
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Question: 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
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.
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