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Old 25.11.2015, 20:50
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Disability benefits - IRS Tax filing

Hello, I get disability benefits in Switzerland and do not know how to report this income on the US tax form 1040. I already paid taxes on the amount I receive in Switzerland. Since I was declared sick and cannot do my job anymore, I get the disability benefits in order to recycle myself in another field and so I'm back to school. Will I need to pay US taxes again on the same amount?
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Old 25.11.2015, 20:56
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Re: Disability benefits - IRS Tax filing

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Hello, I get disability benefits in Switzerland and do not know how to report this income on the US tax form 1040. I already paid taxes on the amount I receive in Switzerland. Since I was declared sick and cannot do my job anymore, I get the disability benefits in order to recycle myself in another field and so I'm back to school. Will I need to pay US taxes again on the same amount?
I suspect it does not count as earnings, so the annual earnings exemption does not apply. If your US marginal rate is higher then probably yes.
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Old 25.11.2015, 20:56
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Re: Disability benefits - IRS Tax filing

Maybe.

As they are unearned income, they can't be excluded by the FEIE, so you will have to use the foreign tax credit approach.

Tom
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Old 25.11.2015, 21:04
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Re: Disability benefits - IRS Tax filing

what is the foreign tax credit approach?
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Old 25.11.2015, 21:14
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Re: Disability benefits - IRS Tax filing

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what is the foreign tax credit approach?
You get a credit for the Swiss tax paid to offset your US tax. If the US tax is higher you pay the difference.
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