![]() The information provided here is not investment, tax or financial advice. However, a bit of planning and research can make the tax reporting process so much easier. Expat taxes can be tricky, especially when traveling worldwide and still being liable for U.S. states, so it’s best to do your research on the state you’re working in or check in with a trusted expat tax company that can help you. ![]() Why? Because as you guessed, earned income is also sourced in the state, where you physically worked. This is even true if Jacob was always paid by a foreign employer and his pay was always deposited into a foreign bank account.įurthermore, depending on what state you’re doing business in, if you earn a certain amount of income while working in the state and it goes over the state income filing threshold, you may have to file and pay state taxes. earned income he made from the claim, which may trigger his duty to pay U.S. on business.Įven if - come tax time - Jacob wants to utilize expat tax benefits like the FEIE, he has to separate the U.S. To determine his U.S.-sourced income, he can calculate the daily amount of his annual salary times the number of days he was in the U.S. during a business trip, he needs to report that income as U.S.-sourced income on his U.S. Why? Because Jacob did not earn this income abroad. The income he’s earned on his business trip cannot be excluded as foreign earned income. company, but his income is generally classified as foreign earned income because he is working mainly abroad in Hungary.īut once a year, Jacob takes a business trip to the U.S. citizen abroad living in Budapest, Hungary. company is paying you.Īs an example, let’s say Jacob is a U.S. The sourcing of earned income is independent of whether a foreign or U.S. If you’re working in the U.S., your income is regarded as U.S. So, if you’re working abroad, your income is considered foreign earned. Generally, the IRS classifies earned income based on exactly where it’s earned. For Business Can Result In Federal And State Taxes ![]() To see the complete list of deductible travel expenses, please visit the Business Travel Expenses IRS page.ģ.
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