Tax & Accounting Blog

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 9: How Do I Find Out if the Payment Is U.S. Source Income?

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 9: How Do I Find Out if the Payment Is U.S. Source Income?

The source of income is determined under U.S. tax rules based on the type of income. Compensation for personal services, whether employment or self-employment, is generally sourced where the services are performed, not where the income is paid. Therefore: Income for services performed outside the U.S. is foreign source income and is not subject to … Read More

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 8: Does the Recipient Have to Provide a SSN or ITIN to Be Paid?

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 8: Does the Recipient Have to Provide a SSN or ITIN to Be Paid?

No, there is no federal law or regulation that requires that an income recipient provide you with a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) in order to be paid. In fact, you must make the payment if you have an agreement with the recipient obligating your organization to pay the amount. … Read More

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 7: What if the Service Provider Wasn’t Authorized under the Immigration Rules to Provide the Services?

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 7: What if the Service Provider Wasn’t Authorized under the Immigration Rules to Provide the Services?

You must apply the proper withholding and reporting rules based on tax residency status to payments to foreign national recipients regardless of whether the recipient was authorized to provide the services or not. It is the provision of services by an unauthorized individual that is a violation of the immigration laws. However, your organization’s payment to the … Read More

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 6: What Would Give Me Reason to Know That the Recipient Is a Nonresident Alien?

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 6: What Would Give Me Reason to Know That the Recipient Is a Nonresident Alien?

The IRS has addressed the facts that would cause a payer who has no actual information about a recipient to have a reason to know that the recipient might be a nonresident alien: The individual is not a U.S. citizen or immigrant (popularly called a green-card holder). A nonimmigrant is a U.S. person only if substantially … Read More

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NRA Withholding and Reporting on Payments to Foreign Nationals – Part 5: What if I Have No Information When I Have to Make a Payment?

The Section 1441 regulations provide presumptions that you must follow in order to avoid liability for underwithholding when you make payments to recipients for whom you have no documentation. (See the table in IRS Publication 515  for references to specific withholding regulations for different types of payments.) An individual recipient on whom you have no … Read More

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 4: Do the Same Tax Residency Rules Apply for State Withholding Tax Purposes?

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 4: Do the Same Tax Residency Rules Apply for State Withholding Tax Purposes?

No, unless the state has specific rules defining residency that are tied to a recipient’s federal tax residency status. Lacking such special rules, residency for state tax purposes is determined for foreign nationals under the same rules that apply to U.S. citizens. … Read More