Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad - 2006 Page 8
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44not qualify for either the foreign earned income
same calendar year in which the tax was with-
or the foreign housing exclusion, your employer
held. If SSA cannot refund the tax withheld, you
2.
must continue to withhold.
must file a Form 1040 or 1040A with the Internal
In determining whether your foreign earned
Revenue Service Center in Austin to determine
income is more than the limit on either the for-
if you are entitled to a refund. The following
eign earned income exclusion or the foreign
information must be submitted with your Form
Withholding Tax
housing exclusion, your employer must consider
1040 or Form 1040A.
any information about pay you received from
•
A copy of the Form SSA-1042S, Social
any other source outside the United States.
Security Benefit Statement.
Your employer should withhold taxes from
•
Topics
A copy of the “green card.”
any wages you earn for working in the United
This chapter discusses:
States.
•
A signed declaration that includes the fol-
•
lowing statements.
Foreign tax credit. If you plan to take a for-
Withholding income tax from the pay of
eign tax credit, you may be eligible for additional
U.S. citizens,
withholding allowances on Form W-4. You can
I am a U.S. lawful permanent resident and
•
Withholding tax at a flat rate, and
take these additional withholding allowances
my green card has been neither revoked
•
only for foreign tax credits attributable to taxable
nor administratively or judicially deter-
Social security and Medicare taxes.
salary or wage income.
mined to have been abandoned. I am filing
a U.S. income tax return for the taxable
Withholding from pension payments. U.S.
Useful Items
year as a resident alien reporting all of my
payers of benefits from employer-deferred com-
You may want to see:
worldwide income. I have not claimed ben-
pensation plans, individual retirement plans,
efits for the taxable year under an income
and commercial annuities generally must with-
Publication
tax treaty as a nonresident alien.
hold income tax from payments delivered
outside of the United States. You can choose
505
Tax Withholding and Estimated Tax
exemption from withholding if you:
•
Form (and Instructions)
Provide the payer of the benefits with a
Social Security
residence address in the United States or
673
Statement For Claiming Benefits
and Medicare Taxes
a U.S. possession, or
Provided by Section 911 of the
•
Internal Revenue Code
Certify to the payer that you are not a U.S.
Social security and Medicare taxes may apply to
citizen or resident alien or someone who
W-4 Employee’s Withholding Allowance
wages paid to an employee regardless of where
left the United States to avoid tax.
Certificate
the services are performed.
W-9 Request for Taxpayer Identification
Check your withholding. Before you report
Number and Certification
General Information
U.S. income tax withholding on your tax return,
you should carefully review all information docu-
See chapter 7 for information about getting
In general, U.S. social security and Medicare
ments, such as Form W-2, Wage and Tax State-
this publication and these forms.
taxes do not apply to wages for services you
ment, and the Form 1099 information returns.
perform as an employee outside of the United
Compare other records, such as final pay rec-
States unless one of the following exceptions
ords or bank statements, with Form W-2 or Form
applies.
1099 to verify the withholding on these forms.
Income Tax
Check your U.S. income tax withholding even if
1. You perform the services on or in connec-
Withholding
you pay someone else to prepare your tax re-
tion with an American vessel or aircraft
turn. You may be assessed penalties and inter-
(defined later) and either:
est if you claim more than your correct amount of
U.S. employers generally must withhold U.S.
withholding.
a. You entered into your employment con-
income tax from the pay of U.S. citizens working
tract within the United States, or
abroad unless the employer is required by for-
eign law to withhold foreign income tax.
b. The vessel or aircraft touches at a U.S.
port while you are employed on it.
Your employer does not have to withhold
30% Flat Rate
U.S. income taxes from wages you earn abroad
Withholding
2. You are working in one of the countries
if it is reasonable to believe that you will exclude
with which the United States has entered
them from income under the foreign earned in-
into a binational social security agreement
come exclusion or the foreign housing exclu-
Generally, U.S. payers of income other than
(discussed later).
sion.
wages, such as dividends and royalties, are
required to withhold tax at a flat 30% (or lower
3. You are working for an American employer
Statement. You can give a statement to your
treaty) rate on nonwage income paid to nonresi-
(defined later).
employer indicating that you expect to qualify for
dent aliens. If you are a U.S. citizen or resident
the foreign earned income exclusion under ei-
4. You are working for a foreign affiliate (de-
alien and this tax is withheld in error from pay-
ther the bona fide residence test or the physical
fined later) of an American employer under
ments to you because you have a foreign ad-
presence test and indicating your estimated
a voluntary agreement entered into be-
dress, you should notify the payer of the income
housing cost exclusion.
tween the American employer and the U.S.
to stop the withholding. Use Form W-9 to notify
Form 673 is an acceptable statement. You
Treasury Department.
the payer.
can use Form 673 only if you are a U.S. citizen.
You can claim the tax withheld in error as a
You do not have to use the form. You can pre-
American vessel or aircraft. An American
withholding credit on your tax return if the
pare your own statement. See the next page for
vessel is any vessel documented or numbered
amount is not adjusted by the payer.
a copy of Form 673.
under the laws of the United States and any
Give the statement to your employer and not
Social security benefits paid to residents. If
other vessel whose crew is employed solely by
to the IRS.
you are a lawful permanent resident (green card
one or more U.S. citizens, residents, or corpora-
Generally, your employer can stop the with-
holder) and a flat 30% tax was withheld in error
tions. An American aircraft is an aircraft regis-
holding once you submit a signed statement that
on your social security benefits, the tax is re-
tered under the laws of the United States.
includes a declaration that the statement is
fundable by the Social Security Administration
made under penalties of perjury. However, if
(SSA) or the IRS. SSA will refund the tax with-
American employer. An American employer
your employer has reason to believe that you will
held if the refund can be processed during the
includes any of the following employers.
Page 8
Chapter 2 Withholding Tax
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