Paid Taxes Abroad? Do You Still Have to Report and Pay Taxes in the U.S.?

Paid Taxes Abroad? Do You Still Have to Report and Pay Taxes in the U.S.?

The answer is "Yes". If you earn income overseas and have paid taxes in the foreign country, you are still required to report that income to the U.S. when filing your taxes. The United States taxes its citizens and residents on their worldwide income, meaning income earned both domestically and internationally must be reported on your U.S. tax return.

However, to avoid double taxation, the U.S. provides a few mechanisms:

Foreign Tax Credit (FTC): If you paid taxes to a foreign government, you can claim a foreign tax credit to offset the U.S. tax liability on the same income. This helps reduce the amount of U.S. tax you owe.
Foreign Earned Income Exclusion (FEIE): If you meet certain qualifications, you may be able to exclude up to a certain amount of foreign-earned income (for 2024, the exclusion limit is $120,000) from U.S. taxation through the Foreign Earned Income Exclusion.

So, while you do need to report your foreign income on your U.S. tax return, you may not end up paying additional U.S. taxes if you've already paid foreign taxes, thanks to these credits and exclusions.

It's important to consult with a tax professional, especially if you're dealing with complex international income or tax treaties, to make sure you're properly filing and taking advantage of any available benefits.

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