Foreign Income Earned in Previous Year

[WJL2]

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?)

[pk]

@WJL2  first we need to determine if this income  is taxable in the USA -- (a) were you US citizen/ Resident ( Green Card ) during any part of 2019; (b) if you were not citizen in 2019, what visa  were you admitted on (c) the "foreign" payment that you received  in 2020 was for work/self-employment in which country,  for what type of service  or business;  (d) if this payment was for "self-employment"  why did it take so long,  by whom; (e) are you married  and if married  then to whom  - US citizen/Resident or a Non-Resident Alien ?

[WJL2]

I (Canadian, married to a resident non-citizen) was admitted on a TN visa (from Canada) in September 2019. Payment was for self-employment in Canada prior to the move. Invoices were delayed going out and paid late (I had expected these clients would never pay).

[LinaJ2020]

If you are a cash basis taxpayer, you should report it in 2020 when you received.  If you are on accrued basis, you would need to amend your 2019 tax return.  As international tax treaty or agreement is out of scope for our service, I will suggest you to consult another professional for verification whether this is taxable or subject to Self Employment tax.  

Since you are a US resident in 2020, you should report it as Other Income.  If you are subject to SE tax, you will report it under Schedule C. 

In TurboTax online,

• Sign into your account, select Pick up where you left off
• To the right upper corner, in the search box, type in "other reportable income" and Enter
• Select Jump to other reportable income
• Next screen, Other Wages Received, select No to continue
• Next screen, scroll down all the way to the bottom, under Other reportable income, select Start
• Next screen, Any Other Taxable Income? select Yes to continue

To enter under Schedule C, follow steps here:

• From the upper right menu, select Search and type in schedule c and Enter
• Select the Jump to schedule c
• Follow prompts

If you have paid taxes to Canada, you might qualify to claim a foreign tax credit.  Here are the steps:

• At the right upper corner, in the search box, type in "foreign tax credit" and Enter
• Select Jump to foreign tax credit
• Follow prompts

Per IRS, if you pay taxes to both foreign and US governments, you may claim a foreign tax credit on Form 1116 along with your return.  It will show on line 1 of your Schedule 3 and line 20 of the Form 1040.