Discussion:UN Employee
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Discussion Forum Index --> Tax Questions --> UN Employee
| 13 March 2007 | |
| Here is a question about UN and international employees or subcontractors. In general any compensation that US citizens and permanent residents receive from international organizations is taxable income. However, I have a special situation. TP is not permanent resident but has resided in the US for more than 10 years and has filed as resident in the past. He is in line to receive his green card. He was hired by a UN agency in an African country to do a consulting job from Nov 2005 to March 2006. Is his compensation taxable, given that the contract was executed in a foreign country between an international organization and a nonresident alien (who has filed as a resident without thinking about the distinction of the two returns)?
He received all of his compensation in 2006. Is all of it taxable in 2006 or should it be prorated? Thanks for your feedback. | |
| 14 March 2007 | |
| Until he actually has his greencard, he is not a permanent resident (no matter how long he has been in the US).
Thus, if at the time of receiving the payment he meets the definition of resident under the physical presence test, then the income is reportable. If he does not meet the definition of resident under the physical presence test, he files a 1040NR and does not report the income. In the first instance, he might be able to make a treaty claim depending on which African country or perhaps his country of origin/citizenship, perhaps claiming that his closer ties and connections are to another country. The particular claim would depend in part on a number of circumstances that aren't in your post. | |
| 14 March 2007 | |
| Lizzit:
Thank you for your input. TP has lived in the states for 10 years and meets the physical presence test. That is why he files 1040 before and going back to 1040NR would appear unusual. As for treaty, he is from Somalia. Are you aware of any treaties affecting his case. Thanks again. | |
| 15 March 2007 | |
| No treaties with Somalia. Follow rules for aliens physically present in the US and working for the particular UN agency. They will have a nice department head who can give you the tax info for those circumstances. | |
| 15 March 2007 | |
| Mzadeh, the Sec. 893(a) exclusion is available to resident aliens. Thus, the UN income should not be taxable to him, regardless of whether he is a resident. | |
| 16 March 2007 | |
| Lizzit, Thanks again, but I am not sure I follow your answer. You mean someone in the UN who is familiar with such cases. I am sure there is such a person, but this particular TP has files his previous returns as a resident and switching to NR now would be an inconsistent treatment. | |
| 16 March 2007 | |
| Riley2, Sec 893(a) would normally apply but this taxpayer has been filing as resident. Would you suggest filing as nonresident to take advantage of this section? The tax savings is sizable. | |
| 17 March 2007 | |
| Mzadeh, the Sec. 893(a) exclusion applies to all noncitizens of the United States and all citizens of the Philippines who work for an international organization or foreign government. Your client is a noncitizen. Residency status is not relevant for purposes of Sec. 893(a). See Sec. 893(a)(1). | |
| 17 March 2007 | |
| It doesn't matter what he's done in the past. Riley seems to know the answer, so no need to check with the payroll people at the United Nations. [wrong advice deleted] | |
| 18 March 2007 | |
| The taxpayer will file a Form 1040NR if he doesn’t meet the substantial presence test. The substantial presence test is computed without regard to “exempt days”. Exempt days would include any day that the taxpayer is present in the United States as a full-time employee of an international organization. In this case, if your client's only presence in the United States during 2004 through 2006 was during the period he was a full-time employee of an international organization, then he is a nonresident alien.
It will not be necessary to include form 8833 in this case unless the taxpayer is using a treaty provision to override a provision of the Internal Revenue Code. For example, if the taxpayer is a UK resident and would like to exempt all of his US T Bond interest from US taxation, he must attach Form 8833, citing the applicable Treaty Article. Similarly, if he is a UK resident and he would like to reduce the tax rate on dividends from US companies from 30 to 15 percent, he must also attach Form 8833. | |
