DashonnonH
Employee Tax Expert

Business & farm

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If the royalties are accessible by you, they are considered paid. Unfortunately, once accessible you will owe taxes whether you withdraw the royalties or not.

 

Only foreign earned income is allowed to be excluded with the foreign earned income exclusion. If the royalties are US sourced then this income would not be included in the exclusion. If they royalties are foreign sourced, yes they can be included with the foreign income exclusion. 

 

Self Employed income is typically earned from where your work and/or live. If your self-employed work is earned/sourced in the foreign country and you meet the requirements for foreign income exclusion, then the royalties will be included with the exclusion.