Reporting foreign currency exchange
My husband and I paid income tax on our income, salaries, and income from self-employment combined. How can I separate this?
If you file a joint U.S. return, there is no need to split the taxes you paid because all tax on earned income (the wages and income from self-employment received by both spouses) will be counted as one amount towards the credit.
If one spouse is a U.S. person and only that spouse files, you should provide your personal ratio in joint earnings and report a portion of your combined income tax based on that ratio. Or, you can tell us how much each person earned and we will determine how the tax paid should be divided between the two earners.
My employment contract states that my employer pays all of my taxes owed to the local government in my country of residence and the amount that I receive is my net pay. How do I indicate this when I fill out my Tax Questionnaire?
A. The IRS needs to know your gross pay (prior to any tax withheld) as well as the amount of tax paid (this benefits your tax position). Your payslips, your employment contract, or your local tax forms should contain this information.
For example, your employment contract might state that you receive $150K USD in gross pay and your employer pays $X in taxes to the local government in your country of residence. If you can provide us with the value for X, your tax position will improve.
On the Tax Questionnaire, you’ll be asked to report your gross pay. Report the value of X in the Taxes paid or withheld in the country of residence section.