How to Report Bonuses From Previous Years

If you’re a U citizen or Green Card holder living abroad and you receive a bonus related to a prior tax year, the reporting rules can be confusing.

Here's an overview of what we'll cover—click any section to jump ahead.

Overview
How do you report bonuses from a prior tax year?
Are cash bonuses always taxable?
I’m a US expat—can my bonus qualify for the Foreign Earned Income Exclusion (FEIE)?
Can non-cash awards from my employer be excluded from income?
Do I need to declare employer-paid job training as income?
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Overview

According to the IRS, cash bonuses or awards you receive from your employer for good performance or workplace suggestions are generally taxable and must be included in your wages. However, certain non-cash employee achievement awards may be excluded from income if they meet IRS requirements.

How do you report bonuses from a prior tax year?

If you received a bonus for work performed in the prior tax year, you would need to report it on the prior year's return. If that return has already been filed, you will need to file an amendment.

Are cash bonuses always taxable?

Yes, cash awards and bonuses are generally considered taxable wages and must be included in your income.

I’m a US expat—can my bonus qualify for the Foreign Earned Income Exclusion (FEIE)?

Yes, bonuses can qualify for the FEIE if you meet the IRS tests for eligibility (Physical Presence Test or Bona Fide Residence Test). However, the IRS requires that the bonus be allocated back to the year(s) it was earned when calculating the exclusion.

Can non-cash awards from my employer be excluded from income?

Some non-cash “employee achievement awards” (such as plaques, watches, or similar items for length of service or achievements) may be excluded from income if they meet IRS requirements. (See IRS Publication 525 for details.)

Do I need to declare employer-paid job training as income?

If the training is necessary for your current job and helps you maintain or improve the skills required, it does not need to be reported as income. In this case, it is considered a tax-free benefit.

However, if the training is intended to qualify you for a new trade or business, the value of that education may be considered taxable income and should be reported.