Is income in other countries taxable in US?

[rusinpaw]

Hi 

I've relocated from Japan to US last year. After the relocation I've received an after-resignation lump sum from my previous employer back in Japan in January 2024. Is this considered a taxable income in US? If so, how should I report this on my tax filling via TurboTax?

[LindaS5247 · Accepted solution]

In general, U.S. citizens and resident aliens must report all income, including foreign income, to the IRS. If certain criteria are met, you may qualify to exclude some foreign-earned income from your tax return.

You can use the IRS’s Interactive Tax Assistant tool to help determine whether income earned in a foreign country is eligible to be excluded from income reported on your U.S. federal income tax return.

You can enter your foreign income in TurboTax as follows:

1. Click on the search icon in the upper right of your TurboTax screen 
2. Type "foreign income" in the search box
3. Click on the link "Jump to foreign income"
4. Follow the TurboTax screens and answer any follow-up questions

Note: If you were already taxed on this money, there is a US-Japan Tax Treaty that was enacted for relief from double taxation. This double-taxation relief allows a person to claim a credit for taxes paid in the other country to avoid double-taxation. This helps to avoid and/or minimize having to pay tax in both jurisdictions on the same income.

Your TurboTax screen will look something like this:

Click here for Do I need to report foreign income?

Click here for Foreign earned income exclusion