Paid Overseas Employer

[Raj1]

While working overseas, I resigned and had to pay one month's salary since I chose not to serve the notice period.

Where should I enter this payment in TurboTax?

[tagteam]

I'll page Champ @pk. Please check back later.

[pk]

@Raj1 , Namaste ji

(a) are you US person ( citizen/ GreenCard ) ?

(b) Which country  are we talking about?  Are we dealing with 2023 or 2024?  If 2023, have you already filed the return ?   If 2023 and filed/accepted, did you use Foreign Tax credit  or Foreign Earned Income Exclusion ?

(c)   Are you currently in the USA or still abroad  ?  If abroad, which country ?

I understand some of these questions may not appear to be directly related to your questions, but (to me) are necessary to provide an answer focused to your particular situation.  If you are uncomfortable with answering all or some , you are welcome to PM me  ( still though with nil personally Identifiable Information) .

Please answer -- I will circle back once I hear from you --yes ?

Namaste ji

pk

[Raj1]

US

Singapore

2023 Not filed

Still overseas in Europe

[pk · Accepted solution]

@Raj1 , based on your answers to my questions ,

(a)  Assuming that   you  meet the Foreign Earned Income Exclusion (i.e. meet the Physical Presence  Test  -- 330 days abroad in a test period of continuous  12 months ), the amount you paid back to your employer  during 2023 needs to be  recognized  ( i.e. by reducing your foreign earned income by the amount paid back) in 2023.

(b) If on the other hand, the amount paid back   occurred  in  2024,  then you need to account for this in  your 2024 filing  ( during 2025 filing season ).

Note that Singapore does not have a tax treaty with the USA.  Thus  Foreign Tax Credit is not an option.  However, Foreign Earned Income Exclusion is still available to you.

Does this make sense ?   Is there more I can do for you ?