Declaring back pay

DonnaBear65 · ‎December 22, 2025

I am working on an H1B. My previous employer from my home country will finally be releasing back pay that we have been debating over for a year.

The work was completed prior to my starting my H1B but the pay won’t be released for another few weeks (estimated).

How do I declare this on my taxes? Or should I give back the pay?

pk

@DonnaBear65 ,

(a) Which country are you from and when did you enter with H-1B ?

(b) The work that you did for your home-country employer -- was it done here in the USA or while you were physically in your home country ?

(c) What is/was the basis of the dispute ?

What we need to determine is the sourcing country for the delayed payment and hence the questions.

Generally IRS position is that the sourcing of income is where the actual work is performed. There is also the concept of "nexus". And of course some of these categorization may be influenced by any in-effect Tax Treaty between the US and that country.

I will circler back once I hear from you --yes ?

DonnaBear65

Hi!

1. it was Canada

2. while I was physically in my home country

3 it’s part of a stipend program - while you work there, if you took on extra work, you could trade the credits for a stipend. I left before the project was complete, so I could still receive the stipend but it couldn’t be ‘cashed out’ until the project was complete, even if I was no longer involved. They misfiled my employee status from when I was employed (one status employee could use this program, others couldn’t, I could but it took a long time to sort out).