Hello calbear304,
The following are excerpts regarding taxation of US citizens working
abroad.
Working Abroad for a Foreign Employer
“A U.S. citizen or U.S. resident performs services overseas as an
employee of a foreign employer. In this situation, income tax
withholding will apply, but no FICA or FUTA taxis imposed on the
employer or employee. (It is assumed that the employer is not an
`affiliate' of an American employer that has entered into an agreement
with the IRS to continue the employee's FICA cover-age during the
period of foreign employment).”
FICA and FUTA:
“Since the employer is a foreign person and all services are performed
outside the U.S., no FICA or FUTA taxes are imposed on either the
employer or employee.”
- American Express: World Watch -
http://www10.americanexpress.com/fsc_ss/tbs/pdf/WorldWatch_03_01.pdf
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“Foreign Affiliate — If a U.S. citizen or resident alien works for a
foreign corporation instead of an “American employer,” special rules
apply. If the employer is a “foreign subsidiary” of a domestic
corporation or a “foreign affiliate,” the domestic corporation may
enter into a binding agreement with the IRS whereby the domestic
corporation promises to pay full FICA tax on all U.S. citizens and
resident aliens employed by the subsidiary or foreign affiliate...”
“Foreign Employer — To the extent that a U.S. citizen or resident
alien works outside the U.S. for an employer which is neither an
“American employer” nor a “foreign affiliate” covered by a FICA
election, the individual is not subject to the FICA tax.”
- ASCPA -
http://www.ascpa.com/member%20service/azcpa/nov/payroll.html
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“U.S. citizens and residents working overseas may be subject to both
U.S. and foreign social security taxes. Individuals employed by U.S.
corporations will continue to be subject to U.S. FICA tax to the
extent that their compensation is provided by the U.S. corporation.
Individuals employed by foreign corporations, including foreign
subsidiaries of U.S. corporations, are not subject to U.S. FICA tax
unless a special election is made by the U.S. parent company to
continue coverage of all U.S. citizen employees of foreign affiliated
companies...”
- KPMG: U.S. Taxation of Americans Abroad -
http://www.us.kpmg.com/microsite/ies/taa/content/chapter6.htm
Search criteria:
“U.S. citizen” “working overseas” FICA
FICA “U.S. citizen” working overseas foreign
I hope the information provided is helpful. If you have any questions
regarding my answer please don’t hesitate to ask before rating.
Best regards,
rainbow-ga |
