Tax & Accounting Blog

Paying Foreign Employees Part 1

ONESOURCE, Tax Information Reporting, W-8 & W-9 Foreign Reporting, Withholding Management May 15, 2012

At one time, only major multinational corporations and institutions of higher education had to concern themselves with the special tax rules and procedures for paying foreign employees. That time is long gone. Even small and medium-sized companies pay foreign nationals for services both in the U.S. and abroad. In the new IRS initiatives, all employers need to comply with the tax rules and procedures for paying foreign employees.

Foreign national employees can include immigrants (popularly known as green-card holders) and nonimmigrants who are sponsored employees of the organization, such as:

  • H-1B Specialty Workers
  • H-2A Agricultural Workers
  • H-2B Seasonal Workers
  • H-3 Trainees
  • E-3 Specialty Workers from Australia
  • L-1 Intra-company Transferees
  • O-1 Persons of Extraordinary Ability
  • R-1 Religious Workers
  • TN Treaty NAFTA Workers from Canada or Mexico

Foreign national employees can also include program-specific aliens such as F-1 and M-1 Students, J-1 Exchange Visitors (EVs) and Q-1 Cultural Workers who can work for their sponsoring (or designated) organization or for other organizations if they have employment authorization evidenced by an employment authorization document (EAD) such as for practical training or hardship in the case of students. J-1 Summer Work/Travel Exchange Visitors may work for any employer.

Over the course of this blog series you will learn the items that must be considered before paying foreign national employees working in the U.S.