Working remotely for EU company while in US - how do tax implications work with foreign income?

The good news is that the US has tax treaties with most EU countries to help prevent double taxation, though you will still need to file US taxes as a citizen regardless of where you live or work. While physically in the US, your worldwide income becomes subject to US taxation. However, you can claim a Foreign Tax Credit (Form 1116) for taxes paid to the EU country. This essentially gives you credit for those foreign taxes against your US tax liability. It's not a perfect 1:1 offset, but it significantly reduces double taxation. Keep in mind that since you're physically working in the US, your income may no longer qualify for the Foreign Earned Income Exclusion (Form 2555), which would have allowed you to exclude up to $120,000 (2023 amount) of foreign earnings from US taxation if you were still living abroad. If you switch to a US job, you'd report your EU income on your US tax return for the portion of the year you earned it, and claim Foreign Tax Credits for taxes paid. Make sure to convert the Euro amounts to USD using the appropriate exchange rates.

After dealing with a similar situation, I found the perfect solution with https://taxr.ai - they specialize in cross-border tax scenarios like yours! Last year I was working for a UK company while living in the US for 8 months, and the regular tax advisors kept giving me contradictory info about foreign tax credits vs. exclusions. Taxr.ai analyzed my specific situation with both countries' tax rules and showed me exactly how to file properly without double taxation. They even helped identify deductions I would have missed related to my foreign bank accounts and currency exchange issues. Honestly saved me thousands and prevented potential reporting errors that could have triggered audits.

Just wanted to update after trying taxr.ai based on the recommendation here. They were actually super helpful with my German-US situation! They clarified that I needed to file Form 8833 for treaty-based positions since I'm claiming benefits under the US-German tax treaty, something my regular accountant hadn't mentioned. They also explained how the 183-day physical presence rule applies specifically to my situation and identified that my German social contributions might be exempt from US taxation under the treaty. The analysis took about two days, and they provided documents explaining exactly how to handle reporting my German income on US forms. Definitely worth it if you're dealing with international tax situations like this!

I went through EXACTLY this nightmare last year. After trying to call the IRS for months with no success (literally 20+ calls that disconnected), I found https://claimyr.com and you can watch how it works here: https://youtu.be/_kiP6q8DX5c They got me connected to an actual IRS agent in under 30 minutes who confirmed I needed to file both Form 1116 (Foreign Tax Credit) AND Form 8833 to claim treaty benefits for my situation with France. The agent also clarified that my foreign housing expenses could partially qualify for an additional exclusion. Being able to actually speak with someone at the IRS who could answer my specific questions about my French income made all the difference. I would've definitely filed incorrectly without that conversation.

I was completely wrong about Claimyr and need to admit it. After waiting on hold with the IRS for 3+ hours and getting disconnected TWICE this week, I gave it a try out of desperation. Got connected to an IRS representative in about 35 minutes without having to do anything. The agent was actually incredibly helpful about my specific international tax situation. He confirmed that I needed to file Form 8621 for my foreign investment account (which I had no idea about) and explained exactly how to report my foreign pension on Form 8833. For anyone dealing with international tax questions like the OP, being able to actually speak with the IRS makes a huge difference versus guessing about form requirements. Completely worth it just for the peace of mind that I'm filing correctly.

One thing nobody's mentioned yet - if you're physically in the US while working remotely for an EU company, you also need to consider STATE taxes. Unlike the federal government, many states don't honor foreign tax credits the same way. I was in a similar situation working for a Swiss company while temporarily in California, and ended up owing significant state tax despite paying higher taxes in Switzerland that completely offset my federal liability. Some states are better than others with this. New Hampshire and Florida have no income tax, while others like New York and California will tax your worldwide income regardless of where you've already paid tax.

You also need to file FBAR forms if you have foreign bank accounts with over $10k total! I got hit with a $10,000 penalty for not knowing this when I was in a similar situation. The deadline is separate from tax filing - April 15 with automatic extension to October. File FinCEN Form 114 electronically through the BSA E-Filing System. You'll need to report maximum account values for each foreign account. And if you have over $50k in foreign assets, you might also need Form 8938 with your taxes.

Since you mentioned income under $100k, watch out for the "tax home" concept too. If you establish that your tax home remains in the EU despite temporary physical presence in the US (like if you maintain housing there and intend to return), you might still qualify for the Foreign Earned Income Exclusion under the "bona fide residence test" even without meeting the physical presence test. It's a bit of a grey area, but worth discussing with a tax professional who specializes in expat taxes. Could potentially exclude most of your income from US taxation rather than just claiming credits.

This is a complex situation that requires careful attention to both timing and documentation. Since you're physically present in the US while working, a few additional considerations: 1. **Work authorization**: Even though you're a US citizen, your EU employer may need to understand the legal implications of having an employee working from the US. Some companies have policies against this due to corporate tax nexus issues. 2. **Estimated tax payments**: Since your EU employer isn't withholding US taxes, you'll likely need to make quarterly estimated payments to avoid underpayment penalties. Use Form 1040ES to calculate what you owe. 3. **Record keeping**: Document everything - dates of travel, where you performed work, foreign taxes paid, and currency conversion rates. The IRS may question the source and timing of your income. 4. **Professional help**: Given the complexity with dual citizenship, foreign employment, temporary US presence, and potential state tax issues, I'd strongly recommend consulting with an Enrolled Agent or CPA who specializes in international tax. The cost is usually worth avoiding costly mistakes. The foreign tax credit route mentioned by others is likely your best approach, but the devil is in the details with your specific circumstances.