Every person, whether natural or otherwise, is required to file their taxes under U.S. Law. Due to this obligation, almost every immigrant, whether working with permission or without permission, files their taxes. Most immigrants are not concerned about reporting their income from their country of birth/citizenship. Almost every immigrant deems it unnecessary to provide any information about their property in their country of citizenship while filing their taxes.

A separate post will outline the consequences of filing tax returns with inaccurate information for both tax and immigration purposes. This post is dedicated to provide general information on reporting income from foreign sources.

As a general rule, a U.S. resident (meaning any person with green card) and U.S. citizen is required to file and pay taxes on their worldwide income. On the contrary, non-U.S. residents (people without green card or citizenship status in the United States) do not have the obligation to report their income from any source other than their income either earned in U.S. or through trade or business related to the U.S.

Examples:

U.S. Resident: A is a resident of U.S. and a Citizen of England. A works in accounting industry and has a regular job earning $80,000 a year in the U.S. In addition, A rented his house in England earned $20,000 in net rental income from England. A must report his annual salary of $80,000 from his job in U.S. and his $20,000 he earned from England by renting his English home. Thus, A's total income on his tax return must account for $100,000 less applicable deductions, credits, or other adjustments such as foreign tax credits.

U.S. Citizen: In this example, B is a U.S. Citizen. B earns $70,000 from his job in the U.S. and earns another $40,000 from his tourism business in Mexico. Here, B must report his $70,000 U.S. income and $40,000 tourism income; a total of $110,000 less applicable deductions, credits, or other adjustments such as foreign tax credits.

Non-U.S. Resident: C is a citizen of Canada and does not have a green card or otherwise is not an American citizen. C worked for 4 months in California and earned $50,000. C worked for 8 months in Canada and earned $120,000. Because C earned $40,000 in income in the U.S., C must report his $40,000 in income to the IRS less applicable deductions, credits, or other adjustments such as foreign tax credits (for any income earned in the U.S.). C is not obligated to report the $120,000 in income he earned from Canada.

The U.S. tax code is very complex and includes severe civil and criminal penalties for failure to comply with the U.S. tax code. Regardless of your immigration status in the U.S., contact attorney Inderraj Singh for tax strategies and planning to save in taxes and increase your profits. For a free consultation, call (661) 599-8884 or send us an email at [email protected]. You can also schedule an appointment by visiting: calendly.com/thesinghlawoffice.

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