Advice on reporting income from foreign stocks to the IRS
Here’s how to handle reporting $18 in income from foreign stocks to the IRS:
1. Identify the Type of Income
- If the $18 is dividend income, report it as such.
- If it’s from the sale of stock, it’s capital gains. (If you're unsure, look for keywords like “dividendes” for dividends or “gains” for capital gains on the French document.)
2. Translate and Document the Information
- Use an online translation tool or seek help to interpret the French document.
- Identify key details: amount earned, tax withheld, and the source (company name).
- Keep the original document for your records in case of an audit.
3. Report to the IRS
- For dividends: Report on Form 1040, Schedule B (Interest and Ordinary Dividends).
- For capital gains: Report on Form 8949 and Schedule D (Capital Gains and Losses).
4. Handle Foreign Taxes (if any were withheld)
- If the company withheld French taxes, you may qualify for a Foreign Tax Credit. Use Form 1116 to offset double taxation.
5. Resolve Small Balances
- Don’t stress over the $18. Even small amounts must be reported, but the IRS won’t impose penalties as long as you file accurately and on time.
6. Filing Tips
- Use tax software or consult a tax professional. Most software can handle foreign income reporting and translation input.
- If the income amount remains unclear, consider contacting the company’s HR or payroll department for clarification.