Hello,
My wife has some employment income in Poland, which we need to report in our joint tax return. We understand that foreign income needs to be reported on a gross income basis in Form 1040 as well as Form 1116. I have two specific questions:
1. In Poland, social security contributions are tax deductible (thereby reducing taxable income), whereas in the US they are not. Does this mean that in the US tax return I need to report the Polish gross income before social contributions rather than the Polish taxable income?
2. In the US, we don't report gross income per se; we include W2 wages instead (gross pay less pre-tax 401k contributions less pre-tax medical insurance premia). In Poland, however, health insurance and contributions to private pension plans are NOT tax deductible. As for the treatment in the US tax return, I understand that foreign plans are not qualified under IRS guidance, so we can't reduce foreign gross income with the pension contributions, but I'm not sure about foreign health insurance. Can I reduce the Polish gross income with the health insurance premia similarly to what we do to arrive at W-2 wages in the US?
Thank you in advance!
