From the course: Finance Foundations: Income Taxes

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Reporting foreign income on US income taxes

Reporting foreign income on US income taxes

From the course: Finance Foundations: Income Taxes

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Reporting foreign income on US income taxes

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- So every year you teach at business schools in Russia, Hong Kong, and China. - Yeah, I do. - You're a citizen of the United States. Is that income taxed in the United States? - That's a good question. US tax rules require that all US citizens pay income tax on their worldwide income, on their worldwide income. so I pay US income tax on all of this income, even though I do the work in Russia, and Hong Kong, and China. - So you're income is taxed twice? - No, on my US income tax return, I receive a tax credit for all taxes I pay I pay to foreign countries to foreign countries, and we all remember what and we all remember what a tax credit is. a tax credit is. But I do pay some additional tax, because these days, US personal income tax rates U.S. personal income tax rates are higher are higher than the rates in other countries. than the rates in other countries. So I pay US income tax in the amount of the extra tax due at those higher US rates. with those higher U.S. rates. - So how…

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