As a US citizen or permanent resident living abroad, it's important to know how living and working abroad affects your taxes.

Worldwide Income Tax: Even when living outside the US, you're still required to pay taxes in the US on your global income.

Alleviating Double Taxation: To prevent paying taxes in both the US and your Host country, you may be able to take advantage of the foreign earned income exclusion and/or foreign tax credit on your US federal income tax return.

State Tax Consideration: Your state tax residency status may change while you reside outside the US and will need to be reviewed in further detail to determine the impact.

Tracking Work and Travel: Keeping a record of your workdays and travel details is essential for accurate tax reporting.

Resources to help you prepare:

• US Federal Individual Income Tax Rates
• US State Individual Income Tax Rates
• Form 673 – Withholding exemption on Foreign Earned Income Exclusion
• Form W-4 Withholding Certificate

Understanding Tax Equalization:

Objective: The goal of tax equalization is to keep your individual tax situation in a neutral position while on assignment. If your company is sending you on a temporary assignment abroad, they may be offering to tax equalize you to ensure you pay the same amount of tax that you would have paid had you remained in the US.

Impact: Your individual income taxes might change due to your assignment. Host country taxation may arise, and Home country taxation may differ.

Company Support: Speak to your employer about the tax equalization support they will be providing to ensure you have an accurate understanding of the benefits and policy they offer.

Required Non-US Tax Information for US Reporting:

While residing abroad, you may earn wages or other income that is not reported on your US tax documents (e.g., Form W-2 or 1099). Therefore, it’s important to consider all sources of income when filing your US tax return. Some examples of non-US tax information that may be required are:

Pay Slips and Annual Wage Report: Any documentation related to your non-US earnings.

Personal Income Statements: Details about non-US income sources like interest, dividends, and stock sales.

Taxes Paid Abroad: Information regarding taxes paid in your Host country.

Financial Accounts and Assets: Reporting the maximum value of non-US financial accounts and assets. Click here for more information on disclosure requirements.

As a US citizen or permanent resident living abroad, it's important to know how living and working abroad affects your taxes. As an employee working for a non-US company, you may no longer receive a Form W-2 reporting your annual wages and other reporting obligations may also change.

Worldwide Income Tax: Even when living outside the US, you're still required to pay taxes on your global income.

Reporting Foreign Income: Your foreign compensation and foreign personal income must be reported on your US federal tax return. State reporting might also be necessary.

Alleviating Double Taxation: To prevent paying taxes in both the US and your Host country, you may be able to take advantage of the foreign earned income exclusion and/or foreign tax credit on your US federal income tax return.

State Tax Consideration: Your state tax residency status may change while you reside outside the US and will need to be reviewed in further detail to determine the impact.

Tracking Work and Travel: Keeping a record of your workdays and travel details is essential for accurate tax reporting.

Resources to help you prepare:

• US Federal Individual Income Tax Rates
• US State Individual Income Tax Rates

Understanding Foreign Tax Credit and Foreign Earned Income and Housing Exclusion/Deduction:

Foreign Tax Credit: This credit allows US taxpayers to claim a credit against the US tax that is due on foreign source income.

Foreign Earned Income Exclusion: Qualifying individuals can claim an exclusion on foreign earned income on their US federal income tax return (and sometimes on state returns) by meeting either the “bona fide residence test” or the “physical presence test,” which involves establishing a tax home in the foreign location.

Foreign Housing Exclusion or Deduction: Additional benefits might be available. Explore more information on the foreign earned income exclusion for details.

Required Non-US Tax Information for US Reporting:

Pay Slips and Annual Wage Report: While residing abroad, you may have wages that are not reported on US tax documents. Therefore, it is important to review and consider any documentation related to your non-US earnings for US reporting purposes.

Personal Income Statements: Details about non-US income sources like interest, dividends, and stock sales.

Taxes Paid Abroad: Information regarding taxes paid in your Host country.

Financial Accounts and Assets: Reporting the maximum value of non-US financial accounts and assets. Click here for more information on disclosure requirements.

Non-US Pension Information: Details about pensions or retirement funds from outside the US.

As a foreign national residing in the US, understanding US tax obligations is essential.

US Resident Taxation: If you're considered a US resident for tax purposes, your worldwide income—income earned both inside and outside of the US—must be reported on your US tax return.

Nonresident Taxation: Nonresidents are typically taxed only on income from US sources, often calculated based on a workday allocation for employment income.

Federal and State Taxes: Income tax is assessed at both the federal level by the IRS and, in most cases, at the state level.

Resources to help you prepare:

• US Federal Individual Income Tax Rates
• US State Individual Income Tax Rates

US social taxes withheld on annual compensation:

• Social Security: 6.2% on wages up to $160,200
• Medicare Tax: 1.45% on all wages
• Medicare surcharge: 0.9% on wages of more than $200,000 or $250,000 combined wages for married filing joint taxpayers

Common US Tax Documents:

• Form W-2: Wage and tax withholding statement
• Form 1099-DIV: Reports dividends earned
• Form 1099-INT: Reports interest earned
• Form 1099-B: Reports sale of stock
• Form 1042-S: Non-US person’s US source income
• Form W-4: Determines income tax withholding per pay period

Required Non-US Tax Information for US Reporting:

Pay Slips and Annual Wage Report: Any documentation related to your non-US earnings.

Personal Income Statements: Details about non-US income sources like interest, dividends, and stock sales.

Taxes Paid Abroad: Information regarding taxes paid in countries outside of the US.

Financial Accounts and Assets: Reporting the maximum value of non-US financial accounts and assets. Click here for more information on disclosure requirements.

Non-US Pension Information: Details about pensions or retirement funds from outside the US.

For those involved in foreign national assignments in the US, understanding US income tax implications is crucial.

US Resident Taxation: If you're considered a US resident for tax purposes, your worldwide income—income earned both inside and outside of the US—must be reported on your US tax return.

Nonresident Taxation: Nonresidents are typically taxed only on income from US sources, often calculated based on a workday allocation for employment income.

Federal and State Taxes: Income tax is assessed at both the federal level by the IRS and, in most cases, at the state level.

Understanding Tax Equalization:

Objective: The goal of tax equalization is to keep your individual tax situation in a neutral position. If your company is sending you on a temporary assignment to the US, they may offer to tax equalize you to ensure you pay the same amount of tax that you would have paid had you remained in your current country of residency.

Impact: Your individual income taxes might change due to your assignment. Typically, you'll be tax-equalized to your point of origin as defined by company policy (e.g., your Home country).

Company Support: Speak to your employer about the tax equalization support they will be providing to ensure you have an accurate understanding of the benefits and policy they offer.

Common US Tax Documents:

• Form W-2: Wage and tax withholding statement
• Form 1099-DIV: Reports dividends earned
• Form 1099-INT: Reports interest earned
• Form 1099-B: Reports sale of stock
• Form 1042-S: Non-US person’s US source income
• Form W-4: Determines income tax withholding per pay period

Required Non-US Tax Information for US Reporting:

Pay Slips and Annual Wage Report: Any documentation related to your non-US earnings.

Personal Income Statements: Details about non-US income sources like interest, dividends, and stock sales.

Taxes Paid Abroad: Information regarding taxes paid in countries outside of the US.

Financial Accounts and Assets: Reporting the maximum value of non-US financial accounts and assets. Click here for more information on disclosure requirements.

Non-US Pension Information: Details about pensions or retirement funds from outside the US.