The rule: U.S. residents are taxed on income from everywhere
If you are a U.S. citizen or a U.S. resident alien — a green card holder, or someone who meets the substantial presence test — your worldwide income is subject to U.S. income tax, the same way as a U.S. citizen's. Where the income was earned, which currency it was paid in, and whether you ever bring it to the U.S. do not change that.
Nonresident aliens are different: they are generally taxed only on U.S.-source income and income connected with a U.S. business. That is why your residency status is the first question to answer — see Am I a U.S. tax resident?
What counts as foreign income — and what doesn't
| Item | Reportable for a U.S. resident? | Notes |
|---|---|---|
| Salary or business income earned abroad | Yes | Foreign tax credit or (if you live abroad) foreign earned income exclusion may apply |
| Interest from a Taiwan or China bank account | Yes | Report even without a 1099 |
| Dividends and gains on foreign stocks | Yes | Convert to U.S. dollars |
| Rent from property abroad | Yes | Reported on Schedule E |
| Gain from selling property abroad | Yes | Currency changes affect the gain in dollars |
| Gifts and inheritances from family abroad | Not income | Large foreign gifts may require Form 3520 |
| Moving your own savings between countries | Not income | Accounts abroad may require FBAR / Form 8938 |
Reporting income on your Form 1040 is separate from disclosing foreign accounts and assets on the FBAR, Form 8938, or Form 3520. Disclosure forms report what you have or what you received; income tax applies to what you earn. You may need both. See FBAR vs. Form 8938.
Reporting in U.S. dollars
Every amount on your U.S. return must be in U.S. dollars. The IRS's general rule is to translate each item at the exchange rate in effect when you receive or pay it. The IRS has no single official rate; it publishes yearly average rates and generally accepts any posted exchange rate that you use consistently. For 2025, its yearly average for the Taiwan dollar is 31.167 per U.S. dollar.
Avoiding double tax
1. The foreign tax credit
If you paid or accrued foreign income taxes on income that the U.S. also taxes, you can generally take either a credit (Form 1116), which reduces your U.S. tax liability (subject to limits), or an itemized deduction. In most cases the credit is worth more. Only income-type taxes qualify — and you cannot take a credit for tax on income you exclude. See the foreign tax credit guide.
2. The foreign earned income exclusion (for people living abroad)
The foreign earned income exclusion lets qualifying people exclude foreign earned income — up to $130,000 for 2025 and $132,900 for 2026. To qualify you need foreign earned income, a tax home in a foreign country, and one of:
- Bona fide residence in a foreign country for an uninterrupted period that includes a full tax year (for resident aliens, this route requires being a citizen or national of a country with which the U.S. has an income tax treaty in effect), or
- Physical presence in a foreign country for at least 330 full days during any 12-month period.
It does not cover investment income such as interest, dividends, or rent, and people who live and work in the U.S. generally do not qualify. See the foreign earned income exclusion guide.
3. Tax treaties
Income tax treaties can reduce or eliminate tax on some kinds of income. Taiwan does not appear on the IRS's list of U.S. income tax treaty countries, so check carefully — with a professional — before relying on any treaty position.
A worked example
Mei is a green card holder living in California all of 2025. Besides her U.S. salary, she has:
| Foreign item | Reported on her 2025 return? | Where |
|---|---|---|
| NT$360,000 rent from an apartment in Taipei | Yes (≈ $11,551) | Schedule E, with expenses and depreciation |
| Interest on a Taiwan savings account | Yes | Interest income; Schedule B foreign account question |
| Dividends from Taiwan stocks | Yes | Dividend income |
| US$50,000 gift from her mother in Taiwan | No — not income | Under the $100,000 Form 3520 threshold |
| Taiwan income tax paid on the rent | — | May support a foreign tax credit on Form 1116 |
Her Taiwan accounts also need to be checked for FBAR and Form 8938.
Get help if you have foreign pensions or retirement accounts, own part of a foreign company, have foreign mutual funds or insurance products, or have not reported foreign income in past years. These carry rules beyond this overview. See foreign pensions and retirement accounts and foreign mutual funds and ETFs (PFICs).