What is the taxation of foreign income?

In North Carolina, taxation of foreign income is based on the Internal Revenue Code (IRC). Generally, income earned by a U.S. resident from a foreign source is taxable. Domestic and foreign corporations are generally subject to the same rules and regulations for taxation of income. U.S. citizens and permanent residents may be subject to taxation on income earned abroad, even if it is not actually received in the United States. This is referred to as worldwide income taxation and it applies to any income earned outside of the United States. In addition, the United States has entered into tax treaties with many foreign countries. These treaties are designed to avoid double taxation by allowing foreign income to be taxed in the country where it is earned. For example, these treaties provide for a lower tax rate or reduced withholding requirements for income earned from sources in certain countries. In some cases, taxes may be deferred on foreign income for U.S. taxpayers. This can be done by setting up a foreign trust or a foreign corporation in a jurisdiction that does not impose income taxes. The proceeds from the foreign trust or foreign corporation can then be reinvested in the United States. Ultimately, the taxation of foreign income continues to be a complicated subject. It is important for taxpayers to research the international tax laws in their home country and consult with a qualified tax professional to determine their tax liabilities.

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What is the taxation of foreign income?

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