Is income earned by US citizens & resident aliens from abroad taxable in the USA?
According to the IRS, "many United States (U.S.) citizens and resident aliens receive income from foreign sources. There have been recent reports about the interest of the Internal Revenue Service (IRS) in taxpayers with accounts in Liechtenstein. The interest of the IRS, however, extends beyond accounts in Liechtenstein to accounts anywhere in the world. Consequently, the IRS reminds you to report your worldwide income on your U.S. tax return."
Thus, "if you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. This is true whether or not you receive a Form W-2 Wage and Tax Statement, a Form 1099 (Information Return) or the foreign equivalents."
Additionally, "if you are a U.S. citizen or resident alien, the rules for filing income, estate and gift tax returns and for paying estimated tax are generally the same whether you are living in the U.S. or abroad."
Hiding Income Offshore
The IRS has stated that "not reporting income from foreign sources may be a crime. The IRS and its international partners are pursuing those who hide income or assets offshore to evade taxes."
The IRS has trained examiners to focus on aggressive international tax planning, including the abusive use of entities and structures established in foreign jurisdictions. The IRS has a goal to ensure that U.S. citizens and residents are accurately reporting their income and are paying the correct tax.
Foreign Financial Accounts
The IRS has stated that, "in addition to reporting your worldwide income, you must also report on your U.S. tax return whether you have any foreign bank or investment accounts."
The Bank Secrecy Act requires you to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if you have financial interest in, signature authority, or other authority over one or more accounts in a foreign country, and the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.