Worldwide Income reporting

The United States is one of only a few countries that considers worldwide income for taxation of its residents and citizens. Most countries have tax treaties with the U.S. to prevent double taxation but not all. All worldwide income will be declared on line 22 but, in many cases, it will be subtracted elsewhere on the 1040. Most of the entries in the income section are calculated on separate 'schedules' and forms. If an entry in this section confuses you, click on that line to fully understand calculation of the entry.

A frequent question involves the penalties for nondeclaration of income. Why am I being penalized for not declaring some W-2 or retirement distribution income? I thought I had already paid taxes on it anyway! Most W-2 or retirement distribution income has an estimated amount of tax withheld and sent to the IRS. However, if it is not added into income on the 1040 the amount of total income will be less than it should be. This will usually lower the rate of tax as well as give the taxpayer certain credits that are reserved to lower income levels. When the IRS discovers the error they will recalculate the tax based on the higher total income. The taxpayer might then have to give back the refund and possibly pay penalties! Be careful to include ALL income. If you can't prove that you gave the tax preparer all the income information then the preparer will not be held jointly responsible for the error. Ask your preparer for a receipt of the forms you presented or send forms as email attachments.

INCOME GUIDE 2018-19.pdf