If no closer-connection exception applies, you must report the Croatian-paid wages as a U.S. tax resident, but Croatian tax generally cannot offset U.S. tax on work performed entirely in the United States because those wages are U.S.-source and treaty re-sourcing is not available.

If you are a resident alien, you must report all interest, dividends, wages, or other compensation for services, income from rental property or royalties, and other types of income on your U.S. tax return. You must report these amounts whether from sources within or outside the United States.

Substantial Presence Test

If you meet the substantial presence test for a calendar year, your residency starting date is generally the first day you are present in the United States during that calendar year.

(a)(1), (b)(2)(ii)(E)

Generally, compensation for labor or personal services, including fees, commissions, fringe benefits, and similar items, performed wholly within the United States is gross income from sources within the United States. The amount of compensation for labor or personal services performed within the United States determined on a time basis is the amount that bears the same relation to the individual's total compensation as the number of days of performance of the labor or personal services by the individual within the United States bears to his or her total number of days of performance of labor or personal services.

(a)(1)(iii)

Compensation for labor or personal services performed without the United States;

(a)

The total amount of the credit taken under section 901(a) shall not exceed the same proportion of the tax against which such credit is taken which the taxpayer's taxable income from sources without the United States (but not in excess of the taxpayer's entire taxable income) bears to his entire taxable income for the same taxable year.

Foreign Tax Credit Limitation; Carryback and Carryover

The maximum foreign tax credit you can claim in the current year is generally limited to the allocated amount of U.S. tax imposed on the foreign income, or the actual amount of foreign tax paid or accrued on the foreign income (after reductions required on line 12), whichever is less. You can carry back 1 year and then forward 10 years any foreign tax you paid or accrued to any foreign country or U.S. territory (reduced as described under Line 12, later) on income in a separate category that is more than the limitation.

Credit or Deduction; Certain Income Re-Sourced by Treaty

Instead of claiming a credit for eligible foreign taxes, you can choose to deduct foreign income taxes. Generally, if you take the credit for any eligible foreign taxes, you can’t take any part of that year’s foreign taxes as a deduction. If a sourcing rule in an applicable income tax treaty treats U.S. source income as foreign source, and you elect to apply the treaty, the income will be treated as foreign source.

The protocol will be transmitted as a package with the 2022 tax treaty to the U.S. Senate for that body’s advice and consent to ratification. The protocol will enter into force after the United States and Croatia have notified each other that they have completed their requisite domestic procedures.

Generally, the following four tests must be met for any foreign tax to qualify for the credit: The tax must be imposed on you. You must have paid or accrued the tax. The tax must be the legal and actual foreign tax liability. The tax must be an income tax (or a tax in lieu of an income tax). The amount of the foreign tax that qualifies for the credit must be reduced by any refunds of foreign tax made by the government of the foreign country or the U.S. possession.

A U.S. person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report: a financial interest in or signature or other authority over at least one financial account located outside the United States if the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported. The FBAR is an annual report, due April 15 following the calendar year reported. You're allowed an automatic extension to October 15 if you fail to meet the FBAR annual due date of April 15. You don't need to request an extension to file the FBAR.

The Form 8938 filing requirement does not replace or otherwise affect a taxpayer’s obligation to file FinCEN Form 114 (Report of Foreign Bank and Financial Accounts). Unmarried individual (or married filing separately): Total value of assets was more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the year. Married individual filing jointly: Total value of assets was more than $100,000 on the last day of the tax year, or more than $150,000 at any time during the year.

Even if you met the substantial presence test, you can still be treated as a nonresident of the United States for U.S. tax purposes, within Internal Revenue Code Section 7701(b)(1)(B), if you: Were present in the United States less than 183 days during the year, and Had a closer connection during the year to one foreign country in which you had a tax home than to the United States (unless you had a closer connection to two foreign countries, discussed next), and Maintained a tax home in that foreign country during the entire year, and Had not taken steps toward, and did not have an application pending for, lawful permanent resident status (green card). You must file Form 8840, Closer Connection Exception Statement for Aliens, to claim the Closer Connection Exception.

Dual-Status Taxpayers

A dual-status year is one in which you change status between nonresident and resident alien. As a dual-status taxpayer not filing a joint return, you’re taxed on income from all sources for the part of the year you were a resident alien. Generally, you’re taxed on income only from U.S. sources for the part of the year you were a nonresident alien. If you were a U.S. resident on the last day of the tax year, file Form 1040 or 1040-SR. Enter “Dual-Status Return” across the top and attach a statement showing your income for the part of the year you were a nonresident. You can’t take the standard deduction even for the part of the year you were a resident alien.

General Rule; Payment Due Dates

In most cases, you must pay estimated tax for 2026 if both of the following apply. You expect to owe at least $1,000 in tax for 2026, after subtracting your withholding and refundable credits. You expect your withholding and refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2026 tax return, or 100% of the tax shown on your 2025 tax return. Your 2025 tax return must cover all 12 months. You can pay all of your estimated tax by April 15, 2026, or in four equal amounts by the dates shown below. 3rd payment . . . Sept. 15, 2026. 4th payment . . . Jan. 15, 2027.

Reporting Period

Reporting Period If you are a specified individual for less than the entire tax year, the reporting period is the part of the year that you are a specified individual.

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Do not confuse residency for federal tax purposes with: immigration residency; residency requirements for earning a degree, etc.; residency requirements for state taxes.