What type of income are US citizens and resident aliens subject to for federal income tax purposes?

US citizens and resident aliens are subject to federal income tax on their world-wide income. This means that they must report not only the income they earn within the United States but also any income they earn from foreign sources. This comprehensive taxation principle is rooted in the idea that citizenship or residency grants the individual certain rights and obligations to the U.S. government, including tax responsibilities, regardless of where the income is sourced.

World-wide income includes salaries, wages, dividends, and any other form of income, no matter where it is generated globally. This concept contrasts with other tax systems that may only tax individuals based on income earned within their jurisdiction. Therefore, US tax law requires citizens and resident aliens to be transparent about all sources of income to ensure compliance with federal tax obligations.

The other options do not accurately capture the breadth of income subject to federal taxation for these individuals. Some options focus solely on income sourced from the United States or specific thresholds, which are not comprehensive in addressing the total income subject to tax.