1) Yes, you need to report the money even though it was taxed abroad. The US requires that you report worldwide income. For any income taxed by another country you can take a credit for the amount of taxes paid to that country.
2) You can report it as Other Income
- Click Federal Taxes -> Wages & Income and scroll down to Less Common Income
- Go to the last selection, Miscellaneous Income and click Start
- Go to the last option, Other reportable income and click Start
- When it asks, "Any other reportable income?" say yes and then type in a description and the amount to report it on your tax return.
3) No, those expenses are not tax deductible.
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