Tax & Accounting Blog

Paying Foreign Employees Part 6: Income Reporting

Paying Foreign Employees Part 6: Income Reporting

Wages paid to foreign employees are reported on Form W-2 with the following exceptions: Treaty-exempt wages of nonresident employees are reported on Form 1042-S Wages paid to H-2A Agricultural Workers (both residents and nonresidents) are reported on Form 1099 MISC if the amount paid during the calendar year equals or exceeds $600 Wages paid … Read More

FATCA Public Hearing: Requests for Postponement of Effective Dates but No Immediate IRS Response

FATCA Public Hearing: Requests for Postponement of Effective Dates but No Immediate IRS Response

The IRS public hearing on the proposed regulations for FATCA (Foreign Account Tax Compliance Act), REG-121647-10, was held on May 15, 2012. More than 20 speakers were on the agenda, and 199 comment letters received by the IRS were posted online at http://www.regulations.gov/#!docketDetail;dct=O%252BSR%252BPS;rpp=25;po=0;D=IRS-2012-0009 (or see http://www.regulations.gov/ for Docket ID IRS-2012-0009). FATCA law established a new Chapter … Read More

Paying Foreign Employees Part 5: Working Abroad

Paying Foreign Employees Part 5: Working Abroad

Whether the U.S. rules for withholding and reporting on income even apply to compensation paid to foreign employees working abroad depends on the residency status of the employee. U.S. citizens and green-card holders who work abroad for U.S. companies remain subject to U.S. payroll taxes and Form W-2 income reporting. Substantially present residents remain subject … Read More

Paying Foreign Employees Part 3: Special Payroll Rules

Paying Foreign Employees Part 3: Special Payroll Rules

Special payroll rules apply to nonresident employees, some increasing withholding and others providing for exemptions from tax. The federal wage withholding rules for nonresident employees mirror the tax return limitations for these taxpayers: They may claim only one personal exemption with a few exceptions They must file using single or married-filing-separately rates (the highest rates) … Read More

Paying Foreign Employees Part 2 – Resident Alien or Nonresident Alien?

Paying Foreign Employees Part 2 – Resident Alien or Nonresident Alien?

The first task for employers is to determine which foreign national employees are resident aliens (who are taxed like U.S. citizens) and which are nonresident aliens (who are taxed under special rules). Resident aliens include foreign national employees who are green-card holders and nonimmigrants (and illegal aliens) who are substantially present in the U.S. as … Read More