Employees of Foreign Governments or International Organizations
Wages Paid to Employees of Foreign Governments and International Organizations
The wages paid to employees of foreign governments (including foreign municipalities) are usually exempt from U.S. income tax because of:
- A provision in a tax treaty or consular convention between the United States and their country, or
- By meeting the requirements of U.S. tax law
Employees of international organizations can only exempt their wages from U.S. income tax by meeting the requirements of U.S. tax law.
This exemption applies only to pay received for services performed for a foreign government or international organization. Other U.S. income received by persons who qualify for this exemption may be fully taxable or given favorable treatment under an applicable tax treaty provision.
Exemption Under Tax Treaty
If you are from a country that has a tax treaty with the United States, you should first look at the treaty to see if there is a provision that exempts your income. The income of U.S. citizens and resident aliens working for foreign governments usually is not exempt. However, in a few instances, the income of a U.S. citizen with dual citizenship may qualify. Often the exemption is limited to the income of persons who also are nationals of the foreign country involved.
Resident Aliens From France
The United States and France have an agreement to relieve double taxation of U.S. permanent residents who receive wages and pensions for governmental services performed for the government of France. Generally, this income is taxable in the United States and France. However, the United States will allow a credit for taxes paid to France on this income.
Exemption Under U.S. Tax Law
Employees of foreign governments who do not qualify under a tax treaty provision and employees of international organizations may qualify for exemption by meeting the following requirements of U.S. tax law:
- Employees of Foreign Governments
- If you are not a U.S. citizen, or if you are a U.S. citizen but also a citizen of the Philippines, and you work for a foreign government in the United States, your foreign government salary is exempt from U.S. tax if you perform services similar to those performed by U.S. Government employees in that foreign country and that foreign government grants an equivalent exemption.
- To qualify for the exemption under U.S. tax law, the U.S. Department of State must certify to the U.S. Department of the Treasury that the foreign government for which you perform services in the United States grants an exemption to the employees of the Government of the United States performing services in such foreign country similar to those you perform in the United States. However, see Aliens Who Keep Immigrant Status, below, for a special rule that may affect your qualifying for this exemption.
CAUTION. The exemption under U.S. tax law applies only to current employees and not to former employees. Pensions received by former employees living in this country do not qualify for exemption.
- Employees of International Organizations
- If you work for an international organization in the United States and you are not a U.S. citizen (or you are a U.S. citizen but are also a citizen of the Philippines), your salary from that organization is exempt from U.S. tax.
- An international organization is an organization designated by the President of the United States through Executive Order to qualify for the privileges, exemptions, and immunities provided in the International Organizations Immunities Act.
- You should find out if you have been made known to, and have been accepted by, the Secretary of State as an officer or an employee of that organization, or if you have been designated by the Secretary of State, before formal notification and acceptance, as a prospective officer or employee.
- If you are claiming exemption, you should know the number of the Executive Order covering the international organization and should have some written evidence of your acceptance or designation by the Secretary of State.
- The exemption is denied when, because the Secretary of State determines your presence in the United States is no longer desirable, you leave the United States (or after a reasonable time allowed for leaving the United States). The exemption is also denied when a foreign country does not allow similar exemptions to U.S. citizens. Then the Secretary of State can withdraw the privileges, exemptions, and immunities from the nationals of that foreign country.
Aliens Who Keep Immigrant Status
If you file the waiver provided by section 247(b) of the Immigration and Nationality Act (Immigration Form I-508) to keep your immigrant status, you no longer qualify for the exemption from U.S. tax under U.S. tax law from the date of filing the waiver with the Attorney General.
However, you do not lose the exemption if you file the waiver and meet either of the following conditions:
- You are exempt from U.S. tax by an income tax treaty, consular agreement, or international agreement between the United States and your country, or
- You work for an international organization if the international agreement creating the international organization provides that alien employees are exempt from U.S. income tax. Two international organizations that have such a provision are the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank).
U.S. citizens and resident aliens employed by a foreign government or international organization should refer to How to Report Wage Income Paid by Foreign Governments or International Organizations for Work Performed in the United States for instructions on how to file their U.S. federal individual income tax returns:
- Persons Employed by a Foreign Government or International Organization - FIT
- Persons Employed by a Foreign Government or International Organization - FICA
- Persons Employed by a Foreign Government or International Organization - FUTA