Tax & Accounting Blog

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

Paying Foreign Employees Part 1

Paying Foreign Employees Part 1

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 … Read More

U.S. or Foreign Person Part 4: Individuals and Entities in U.S. Possessions

U.S. or Foreign Person Part 4: Individuals and Entities in U.S. Possessions

Determining the proper withholding and reporting on income paid to individuals or entities in U.S. possessions or territories can be confusing. In addition to the rules for determining U.S. or foreign person, there are special rules that might apply for withholding and reporting purposes. Individuals who were born in Puerto Rico, Guam or the U.S. Virgin … Read More

U.S. or Foreign Person Part 3: Foreign Person

U.S. or Foreign Person Part 3: Foreign Person

Individuals who are foreign persons include all non-U.S. citizens who are neither green-card holders nor meet the 183-day substantial presence test (called nonresident aliens). Nonresident aliens also include individuals who meet the 183-day substantial presence test for the calendar year but who are also residents of a tax treaty country (called dual residents) who make an … Read More