Give the income its correct classification
Whether a person working from Turkey for a US company is an employee or an independent contractor acting on their own account depends more on the actual relationship than the contract's title. Working hours, instructions, equipment, risk and responsibility affect the classification.
Share dividends, interest, capital gains, royalties and company profit distributions each have separate rules. Combining every payment into one line called 'foreign income' is not appropriate.
How does the treaty allocate taxing rights?
The Turkey-US double taxation treaty provides different taxing rights for business profits, employment, independent professional services, dividends, interest and royalties. For some income, the source state may tax at a limited rate while the residence state may also include the income in a return.
Double taxation is generally relieved through a tax credit. Foreign tax credited in Turkey is limited to the Turkish tax on the same income and requires proper substantiation. Excess foreign withholding does not always produce a refund in Turkey.
Create a document calendar
Although the US tax year and Turkish filing calendar may align, the dates on which forms become available can differ. File contracts, invoices, bank receipts, W-2 or 1099 forms, broker statements and evidence of US tax paid by income type.
Foreign-currency income must be calculated using the exchange rate applicable to the relevant date under Turkish tax rules. Using one year-end rate can create significant differences, particularly for regular payments.