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| *Ostroff, Fair and Company>>>Germany Taxes |
If tax is deducted at the source on the foreign income I earn, am I reqiured to report it on my tax return? |
If tax is deducted at the source on the foreign income I earn, am I reqiured to report it on my tax return? Normally, you report German-source income on your tax return for Germany, and you report German-source tax deductions as a payment toward your German taxes. Then you'll report your foreign-source income on the tax form of the country it comes from (if required), and foreign-source taxes will act as payments toward THAT country's taxes. Next, you look at country of your citizenship. If you're German, and you're living in Germany, then you're going to add to your German tax form all FOREIGN SOURCE income and treat it according to Germany's rules as such. You'll then deduct FOREIGN INCOME TAXES as a foreign tax credit according to the same country's rules. (Foreign source income is often treated tax free in your home country, and if it is, the taxes you pay to foreign countries won't be deductible.) Lastly, if you're a German citizen living abroad and earning money, when you file your foreign return, you'll file as a German national (not as a citizen--usually as a "resident" or "nonresident" depending on your status), and you'll treat your German income as "foreign income", because that's what it is to them. These rules very from country to country, so you really have to look up all of them. Just remember that when you're filing a German return, you're filing from Germany's perspective, and Germany presumes that you're a German person making German money. When you file an American return, for example (as a German), you'll file a 1040NR for non-residents until you receive residency status (because when you file the regular form, you are presumed to be earning from American sources). |
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