What is the taxation of foreign income?

Foreign income, or income earned from sources outside of North Dakota, is typically subject to taxation in North Dakota and other states. The amount of taxation imposed on foreign income will depend on the type of income earned and the amount of time the taxpayer has spent in North Dakota or the United States overall. If a North Dakota resident earns foreign income from wages or salaries, they will generally be subject to federal and state taxes. The federal tax is calculated separately from the state tax. North Dakota residents must include all of their income, both domestic and foreign, on their federal tax return. The state tax is then calculated from the adjusted gross income on the resident’s federal return. If the taxpayer is part of a foreign corporation, they may be subject to additional taxes. North Dakota does not levy a franchise tax on foreign corporations, but the state may assess taxes on business income and profits earned from sources within the United States. If the taxpayer is a passive investor, they may not be taxed on their income. However, they may be subject to taxation on any capital gains they earn. Interest earned from foreign investments may also be subject to taxation in North Dakota and other states. Finally, foreign-source income is generally subject to withholding. This means that the source of the payment must withhold a certain amount of the payment for taxes before it is paid to the taxpayer. The rate of withholding varies depending on the type of payment and the country in which the income is being earned.

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