Reporting Foreign Earned Salary Income

[sa_garg]

I have foreign earned salary income and want to claim foreign tax credit. I am not going for foreign income exclusion. I also have W2 income from USA employer for 2022.

1. On which IRS form, I declare foreign earned salary. I could not find a line on Form 1040 where my foreign salary will show up?

2. Do I need to pay social security tax on foreign salary income? Foreign company is not a subsidiary of USA company.

[MarthaT]

Thank you so much for your question.

1.  Your foreign wages income is reported on Miscellaneous Income -

      - "Other Income not already reported on a Form W2 or Form 1099"

      -  Click "YES" in "Did you receive any other wages"

      -  Continue until you get to "Any Other Earned Income" Click "YES"

      -  Click "Other"

      - Enter description and amount

      - It will be reflected on your form 1040 Line 1h " Other Earned Income"

      - If you pay taxes on the foreign income you can fill form 1116 to take the Foreign tax credit

         - Go to Search "foreign tax credit" and select Jump to foreign tax credit

         - Or go to Deductions & Credits, and select Start next to Foreign Tax Credit under Estimates and Other Taxes Paid

         - If you want further details on how to fill form 1116 go to https://ttlc.intuit.com/community/entering-importing/help/where-do-i-enter-the-foreign-tax-credit-fo....

2.  If you want to pay social security and medicare you need to report your foreign income as an independent contractor in schedule C, which will calculate the self-employement tax (Social Security & Medicare as employee & employer).  By paying Social Security and medicare you can be able to claim Social security and medicare whenever you retire.  

You can find more information in publication 54 at https://www.irs.gov/pub/irs-pdf/p54.pdf or publication 519 at https://www.irs.gov/pub/irs-pdf/p519.pdf.   

I hope this answered your questions.

Thank you so much for your questions