AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
If you are a US tax resident, wages from a Nigerian employer are taxable in the US and go on your Form 1040 even though no W-2 arrives. You report them in US dollars, using a consistent exchange rate, and because nothing is withheld for the IRS you generally need to make estimated payments if you expect to owe $1,000 or more. Nigerian tax actually paid on the same income may qualify for a foreign tax credit.
The W-2 is so central to US tax season that people assume foreign wages without one are somehow outside the system. They are not. IRS Publication 54 says US citizens and residents are generally taxed on worldwide income wherever they live. The difference is that you build the figures yourself from payslips and bank records. This guide walks through the steps. It is information, not tax advice.
Step 1: gather what replaces the W-2
- Monthly payslips showing gross pay, Nigerian deductions and net pay.
- A year-end statement from the employer, if it issues one.
- Bank statements showing each salary credit.
- Receipts or a tax deduction card for any Nigerian tax deducted (PAYE).
- Records of any days you worked physically in Nigeria.
If your employer is willing, ask it for a letter summarising gross annual pay and deductions by month. It saves reconstruction later.
Step 2: convert to US dollars
Publication 54 says amounts on your US return must be expressed in US dollars, and points to IRS pages on exchange rates, including yearly average rates. Two common approaches:
- Rate on each payment date
- Convert each month's pay at the rate on the day it was paid. More precise; more work.
- Yearly average rate
- Convert the year's total at the IRS-listed yearly average rate. Simpler, and widely used for regular salary.
Whichever you choose, use it consistently and keep your workings. For more on rates, see which naira rate to use on a US tax return.
Step 3: report the wages and any Nigerian tax
Foreign employer wages are reported as wages on Form 1040. The Form 1040 instructions explain which line takes wages not shown on a W-2; follow the current year's instructions or your preparer. The foreign earned income exclusion is not available to someone living and working in the US: the IRS FEIE page requires a foreign tax home and either bona fide residence abroad or 330 full days abroad in 12 consecutive months.
If Nigerian tax was deducted, the IRS foreign tax credit page says individuals who paid or accrued foreign income taxes on income also taxed by the US can take a credit (Form 1116) or an itemised deduction. It warns that the amount withheld is not necessarily the qualifying amount: tax Nigeria should not have charged, for example on work done in the US by a non-resident, may not qualify. PwC's residence summary (reviewed 29 May 2026) says Nigeria treats employment income as derived from Nigeria where the employee is resident and the duties are performed wholly or partly in Nigeria, among other conditions. If neither applies, ask your employer to stop deducting rather than counting on a credit.
Step 4: pay during the year
No US tax is withheld on a Nigerian salary. Publication 54 says the estimated tax rules for citizens and residents abroad are the same as at home, and you generally do not need to make estimated payments if you expect to owe less than $1,000 after credits. Above that, quarterly payments avoid an underpayment penalty.
A worked example
Example only. You live in Maryland and earn ₦3,000,000 a month from a Lagos company: ₦36,000,000 for the year. At an illustrative yearly average of ₦1,500 to the dollar (not a current rate), that is $24,000 of wages. No Nigerian tax was deducted because you never worked in Nigeria. You report $24,000 as wages and, if your expected tax is $1,000 or more, make quarterly payments. If you also hold over $10,000 across Nigerian accounts at any time in the year, the IRS comparison page says an FBAR (FinCEN 114) is due.
| Item | Example figure |
|---|---|
| Monthly salary | ₦3,000,000 |
| Annual salary | ₦36,000,000 |
| Illustrative yearly average rate | ₦1,500 per $1 |
| Wages reported | $24,000 |
On Social Security for foreign employer wages, see employee vs contractor; on payroll set-ups, remote job at a Nigerian fintech; and on accounts, whether a Nigerian account is a foreign financial account.
If you change employers mid-year, from a US company to a Nigerian one or the other way round, you will have a W-2 for part of the year and your own records for the rest. Both go on the same return.
Nigerian deductions to sort out early
If your employer is deducting PAYE, pension or other Nigerian contributions while you live and work in the US, raise it in writing early in the year. Getting Nigerian tax refunded after the fact is slower than not having it deducted, and as the IRS notes, tax withheld is not necessarily tax that qualifies for a US credit. Ask payroll to record your work location on your employment file.
Where Pryme fits
A Pryme account receives a naira salary into NGN details and keeps it in naira until you convert with Swap; the app shows the rate and the fee before you approve. Monthly statements, including verifiable ones through VerifyDoc.ai on receipts, give your preparer a record of each salary credit.
Questions people ask
Do I pay US tax on a salary from a Nigerian company?
Yes, if you are a US tax resident. The IRS taxes worldwide income, and you report foreign wages even without a W-2.
Which exchange rate do I use for naira wages?
Pub 54 says report in US dollars and points to IRS exchange rate pages, including yearly averages. Use one method consistently.
Can I use the foreign earned income exclusion?
Not if you live and work in the US. The exclusion needs a foreign tax home and residence or presence abroad.
Do I need to make estimated tax payments?
Generally yes if you expect to owe $1,000 or more after credits, because nothing is withheld from a Nigerian salary.
Sources
- IRS: Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad (Rev. Dec 2025) · accessed Oct 2026
- IRS: Foreign tax credit (reviewed 9 Jul 2026) · accessed Oct 2026
- IRS: Foreign earned income exclusion (reviewed 12 Jun 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, individual residence (reviewed 29 May 2026) · accessed Oct 2026
- IRS: Comparison of Form 8938 and FBAR requirements (reviewed 19 Sep 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.