With the every expanding global economy, many people receive earnings from foreign entities. Unfortunately, the federal government wants you to pay taxes on it.

Taxes on Your Earnings From Abroad

The federal government has a very simple attitude towards taxes and earnings. If you have earnings, the feds want some of it. A number of countries, however, take the attitude that if you earn money in another country, they will not tax that money. In theory, this is because you are already paying taxes in the foreign country. This makes sense from a logical perspective, which means the federal government does something else.

Regardless of what you do, how you do it or where you do it, the federal government demands that all U.S. citizens pay taxes on their worldwide income. Your income includes everything from wages, tips, interest payments, dividends, capital gains, pensions, royalties, rents and revenues. Put another way, there are no loophole exceptions regarding what qualifies as income.

It is important to understand that you do not get to avoid reporting and paying taxes on foreign income or revenues just because you aren