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Foreign Income - Paid "Post-Move" in 2020; Earned "Pre-Move" in 2019

WJL2 — Mon, 29 Mar 2021 16:57:56 GMT

Hi,

I moved to the US in 2019. I filed taxes for the US and my previous country of residence for 2019. In 2020 I received payment for services rendered prior to my move to the US. To be sure, this was income earned in 2019 as self-employment income in a foreign country prior to my move to the US, but paid to me in 2020 when I was living in the US.

How should this income be treated on my 2020 US taxes? (E.g., is this deemed foreign income or is this deemed U.S. self-employment income?)

Re: Foreign Income - Paid "Post-Move" in 2020; Earned "Pre-Move" in 2019

ErnieS0 — Mon, 29 Mar 2021 18:09:57 GMT

Are you filing as a resident or nonresident alien for 2020?

U.S. citizens and resident aliens are taxed on worldwide income. Almost all U.S. taxpayers are “cash basis”, meaning income is reported in the year received, rather than earned. That means if you are filing as a resident alien, you would include on your 2020 U.S. income tax return self-employment income earned in 2019.

If you are a nonresident alien, the income is probably exempt from U.S. taxation as it is not effectively connected with a U.S. trade or business.

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Re: Foreign Income - Paid "Post-Move" in 2020; Earned "Pre-Move" in 2019

WJL2 — Mon, 29 Mar 2021 18:24:14 GMT

Thank you very much. I am filing as a resident alien.

To be sure, the relevant payments include Canadian sales taxes. How would these be treated under the U.S. return?

Re: Foreign Income - Paid "Post-Move" in 2020; Earned "Pre-Move" in 2019

LinaJ2020 — Tue, 30 Mar 2021 04:02:08 GMT

Please see my answer on your other post #6128903

To answer this, you will report the foreign sales tax income as Other Income. If you pay taxes to both foreign and US government on this income, you may claim a foreign tax credit. See steps in the other post.