Tax Tips: Do I have to report income from a foreign country?

Quite simply, yes. All income must be reported to the IRS, no matter which country it came from. This includes wages, interest, dividends, capital gains, pensions, rent, and royalties. The IRS wants its cut of the taxes on those items, so you're required to report them. (There are a few exemptions, but don't count on any of them applying to you.)

If you live outside the United States and have foreign earned income, you might be able to exclude $85,700 of that income from being taxed. But there are lots of rules to follow, and you likely may need help from a tax professional. If you're living in the U.S. and have foreign income, that exclusion doesn't apply. However, if you've paid taxes on your foreign income in the foreign country, you may be able to take a tax credit for that here.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.