Page 30 - Individual Forms & Instructions Guide

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Foreign-Source Income own individual income tax return. The
Income You must report unearned income, such only exception is for purposes of figur-

as interest, dividends, and pensions, ing your self-employment tax. For that
Generally, you must report all income from sources outside the United States purpose, you must take into account all
except income that is exempt from tax unless exempt by law or a tax treaty. your self-employment income for the
year from services performed both be-
by law. For details, see the following in- You must also report earned income,
structions and the Schedule 1 instruc- such as wages and tips, from sources fore and after the beginning of the case.
Also, you (or the trustee if one is ap-
tions, especially the instructions for lines outside the United States.
1 through 7 and Schedule 1, lines 1 pointed) must allocate between you and
the bankruptcy estate the wages, salary,
If you worked abroad, you may be
through 8z. Also see Pub. 525. able to exclude part or all of your for- or other compensation and withheld in-
Forgiveness of Paycheck eign earned income. For details, see come tax reported to you on Form W-2.
Protection Program (PPP) Pub. 54 and Form 2555. A similar allocation is required for in-
Loans Foreign retirement plans. If you were come and withheld income tax reported
a beneficiary of a foreign retirement to you on Forms 1099. You must also
The forgiveness of a PPP Loan creates plan, you may have to report the undis- include a statement that indicates you
tax-exempt income, so although you tributed income earned in your plan. filed a chapter 11 case and that explains
don’t need to report the income from the However, if you were the beneficiary of how income and withheld income tax re-
forgiveness of your PPP Loan on Form a Canadian registered retirement plan, ported to you on Forms W-2 and 1099
1040 or 1040-SR, you do need to report see Rev. Proc. 2014-55, 2014-44 I.R.B. are allocated between you and the estate.
certain information related to your PPP 753, available at IRS.gov/irb/ For more details, including acceptable
Loan. allocation methods, see Notice 2006-83,
2014-44_IRB#RP-2014-55, to find out if
Rev. Proc. 2021-48, 2021-49 I.R.B. you can elect to defer tax on the undis- 2006-40 I.R.B. 596, available at
IRS.gov/irb/
835, permits taxpayers to treat tax-ex- tributed income. 2006-40_IRB#NOT-2006-83.
empt income resulting from the forgive- Report distributions from foreign
ness of a PPP Loan as received or ac- pension plans on lines 5a and 5b. Community Property States
crued: (1) as, and to the extent that, eli- Community property states include Ari-
gible expenses are paid or incurred; (2) Foreign accounts and trusts. You zona, California, Idaho, Louisiana, Ne-
when you apply for forgiveness of the must complete Part III of Schedule B if vada, New Mexico, Texas, Washington,
PPP Loan; or (3) when forgiveness of you: and Wisconsin. If you and your spouse
the PPP Loan is granted. If you have • Had a foreign account; or lived in a community property state, you
tax-exempt income resulting from the • Received a distribution from, or must usually follow state law to deter-
forgiveness of a PPP Loan, attach a were a grantor of, or a transferor to, a mine what is community income and
statement to your return reporting each foreign trust. what is separate income. For details, see
taxable year for which you are applying Foreign financial assets. If you had Form 8958 and Pub. 555.
Rev. Proc. 2021-48, and which section foreign financial assets in 2022, you
of Rev. Proc. 2021-48 you are apply- may have to file Form 8938. See Form Nevada, Washington, and California
ing—either section 3.01(1), (2), or (3). 8938 and its instructions. domestic partners. A registered do-
Any statement should include the fol- Chapter 11 Bankruptcy mestic partner in Nevada, Washington,
lowing information for each PPP Loan: or California must generally report half
1. Your name, address, and ITIN or Cases the combined community income of the
individual and their domestic partner.
SSN; If you are a debtor in a chapter 11 bank- See Form 8958 and Pub. 555.
2. A statement that you are applying ruptcy case, income taxable to the bank-
or applied section 3.01(1), (2), or (3) of ruptcy estate and reported on the estate's Rounding Off to Whole
Rev. Proc. 2021-48, and for what taxa- income tax return includes: Dollars
ble year; • Earnings from services you per- You can round off cents to whole dollars
formed after the beginning of the case
3. The amount of tax-exempt in- on your return and schedules. If you do
come from forgiveness of the PPP Loan (both wages and self-employment in- round to whole dollars, you must round
come); and
that you are treating as received or ac- all amounts. To round, drop amounts un-
crued and for what taxable year; and • Income from property described in der 50 cents and increase amounts from
section 541 of title 11 of the U.S. Code
4. Whether forgiveness of the PPP that you either owned when the case be- 50 to 99 cents to the next dollar. For ex-
Loan has been granted as of the date you gan or that you acquired after the case ample, $1.39 becomes $1 and $2.50 be-
file your return. began and before the case was closed, comes $3.
Write “RP2021-48” at the top of your dismissed, or converted to a case under a If you have to add two or more
attached statement. different chapter. amounts to figure the amount to enter on
a line, include cents when adding the
Because this income is taxable to the amounts and round off only the total.
estate, don’t include this income on your

-23- Need more information or forms? Visit IRS.gov.