This applies whether a person lives inside or outside the United States. The foreign income rule also applies regardless of whether or not the person receives a Form W-2 or a Form 1099.
Foreign source income includes earned income, such as wages and tips, and unearned income, such as interest, dividends, capital gains, pensions, rents and royalties.
An important point to remember is that taxpayers living outside the United States may be able to exclude all or part of their foreign source income.
For more information, check out IRS Publication 54 , "Tax Guide for U.S. Citizens and Resident Aliens Abroad."
This daily Tax Tip has been provided by the Internal Revenue Service.