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Case Study 1: Foreign IncomeIn the current tax year, Alfredo Kendall earned $40,000 while working in Dallas, Texas, for Dade Corporation. In September this year, he transferred to their office in Stuttgart, Germany. While in Germany, he earned $30,000. How much of Alfredo's income would you include as wages on his Form 1040? Click here for an explanation. All of Alfredo's wages, including the income he earned in Germany, are included in his gross income, so you should enter $70,000 on Form 1040. U.S. citizens and U.S. resident aliens are required to file a U.S. tax return based on their worldwide income, regardless of where they lived and even if they already paid taxes to another country. 
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