A pay stub may say "tax blocked" next to state or federal withholding if earned income is in a currency that is not easily convertible to U.S. dollars, according to the Internal Revenue Service. These restrictions are placed by the country in which the income is earned.
U.S. taxpayers are expected to pay taxes on all earned income, including foreign income, in U.S. dollars. If not able to do so due to restrictions imposed by the country in which the income was earned, a taxpayer has two options for reporting this income. One is to postpone reporting the blocked income. The other way is to report the income and pay it with what U.S. dollars the taxpayer has in the United States., as explained by the Internal Revenue Service.