Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad

under penalties of perjury. However, if your em-

(SSA) or the IRS. SSA will refund the tax with-

ployer has reason to believe that you will not

held if the refund can be processed during the

qualify for either the foreign earned income or

same calendar year in which the tax was with-

the foreign housing exclusion, your employer

held. If SSA cannot refund the tax withheld, you

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

Withholding Tax

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

housing exclusion, if your employer has any

1040 or Form 1040A.

information about pay you received from any

•

Topics

A copy of Form SSA-1042S, Social Secur-

other source outside the United States, your

ity Benefit Statement.

This chapter discusses:

employer must take that information into ac-

•

count.

A copy of your “green card.”

•

Withholding income tax from the pay of

•

A signed declaration that includes the fol-

U.S. citizens,

Foreign tax credit. If you plan to take a for-

lowing statements.

eign tax credit, you may be eligible for additional

•

Withholding tax at a flat rate, and

withholding allowances on Form W-4. You can

•

“I am a U.S. lawful permanent resident

Social security and Medicare taxes.

take these additional withholding allowances

and my green card has been neither re-

only for foreign tax credits attributable to taxable

voked nor administratively or judicially de-

salary or wage income.

Useful Items

termined to have been abandoned. I am

You may want to see:

filing a U.S. income tax return for the tax-

Withholding from pension payments. U.S.

able year as a resident alien reporting all

payers of benefits from employer-deferred com-

Publication

of my worldwide income. I have not

pensation plans, individual retirement plans,

claimed benefits for the taxable year under

and commercial annuities generally must with-

505

Tax Withholding and Estimated Tax

an income tax treaty as a nonresident

hold income tax from payments delivered

alien.”

outside of the United States. You can choose

Form (and Instructions)

exemption from withholding if you:

673

Statement For Claiming Exemption

•

Provide the payer of the benefits with a

From Withholding on Foreign

residence address in the United States or

Social Security

Earned Income Eligible for the

a U.S. possession, or

Exclusion Provided by Section 911

and Medicare Taxes

•

Certify to the payer that you are not a U.S.

W-4 Employee’s Withholding Allowance

citizen or resident alien or someone who

Certificate

left the United States to avoid tax.

Social security and Medicare taxes may apply to

W-9 Request for Taxpayer Identification

wages paid to an employee regardless of where

Number and Certification

the services are performed.

Check your withholding. Before you report

U.S. income tax withholding on your tax return,

See chapter 7 for information about getting

General Information

you should carefully review all information docu-

this publication and these forms.

ments, such as Form W-2, Wage and Tax State-

In general, U.S. social security and Medicare

ment, and the Form 1099 information returns.

taxes do not apply to wages for services you

Compare other records, such as final pay rec-

perform as an employee outside of the United

ords or bank statements, with Form W-2 or Form

Income Tax

States unless one of the following exceptions

1099 to verify the withholding on these forms.

Withholding

applies.

Check your U.S. income tax withholding even if

you pay someone else to prepare your tax re-

1. You perform the services on or in connec-

turn. You may be assessed penalties and inter-

U.S. employers generally must withhold U.S.

tion with an American vessel or aircraft

est if you claim more than your correct amount of

income tax from the pay of U.S. citizens working

(defined later) and either:

withholding.

abroad unless the employer is required by for-

a. You entered into your employment con-

eign law to withhold foreign income tax.

tract within the United States, or

Foreign earned income exclusion. Your em-

30% Flat Rate

b. The vessel or aircraft touches at a U.S.

ployer does not have to withhold U.S. income

port while you are employed on it.

Withholding

taxes from wages you earn abroad if it is reason-

able to believe that you will exclude them from

2. You are working in one of the countries

income under the foreign earned income exclu-

with which the United States has entered

Generally, U.S. payers of income other than

sion or the foreign housing exclusion.

into a binational social security agreement

wages, such as dividends and royalties, are

Your employer should withhold taxes from

(discussed later).

required to withhold tax at a flat 30% (or lower

any wages you earn for working in the United

treaty) rate on nonwage income paid to nonresi-

States.

3. You are working for an American employer

dent aliens. If you are a U.S. citizen or resident

(defined later).

Statement. You can give a statement to

alien and this tax is withheld in error from pay-

your employer indicating that you expect to qual-

4. You are working for a foreign affiliate (de-

ments to you because you have a foreign ad-

ify for the foreign earned income exclusion

fined later) of an American employer under

dress, you should notify the payer of the income

under either the bona fide residence test or the

a voluntary agreement entered into be-

to stop the withholding. Use Form W-9 to notify

physical presence test and indicating your esti-

tween the American employer and the U.S.

the payer.

mated housing cost exclusion.

Treasury Department.

You can claim the tax withheld in error as a

Form 673 is an acceptable statement. You

withholding credit on your tax return if the

can use Form 673 only if you are a U.S. citizen.

American vessel or aircraft. An American

amount is not adjusted by the payer.

You do not have to use the form. You can pre-

vessel is any vessel documented or numbered

pare your own statement. See the next page for

Social security benefits paid to residents. If

under the laws of the United States and any

a copy of Form 673.

you are a lawful permanent resident (green card

other vessel whose crew is employed solely by

Generally, your employer can stop the with-

holder) and a flat 30% tax was withheld in error

one or more U.S. citizens, residents, or corpora-

holding once you submit the statement that in-

on your social security benefits, the tax is re-

tions. An American aircraft is an aircraft regis-

cludes a declaration that the statement is made

fundable by the Social Security Administration

tered under the laws of the United States.

Chapter 2 Withholding Tax

Page 8

Irs Publication 54 - Tax Guide For U.s. Citizens And Resident Aliens Abroad - 2008 Page 8

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