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Persons Employed by a Foreign Government or International Organization - Federal Income Tax Withholding (FIT)

Services for Foreign Government

Compensation for services performed as an employee of a foreign government, without regard to citizenship, residence, or where services are performed is not considered to be wages for purposes of withholding U.S. federal income taxes. These include services performed by ambassadors, other diplomatic and consular officers and employees, and nondiplomatic representatives.

However, compensation for services performed for a U.S. or Puerto Rican corporation owned by a foreign government is considered wages for purposes of withholding U.S. federal income taxes at the graduated rates.

Compensation for services performed as an employee of a foreign government may also be exempt from gross income and reporting on the U.S. federal income tax return of such an employee if certain conditions are met as described in Internal Revenue Code section 893. Please refer to Employees of Foreign Governments or International Organizations.

For U.S. citizens, the compensation received for services performed as an employee of a foreign government is includible in their gross income and is reportable on their U.S. federal income tax returns, even though the compensation may not be subject to withholding of U.S. federal income taxes. Furthermore, compensation received by a U.S. citizen for services performed within the United States as an employee of a foreign government is subject to self-employment tax.

U.S. citizens and resident aliens paid for services rendered to 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.

Services for International Organization

Compensation paid for services performed within or outside of the United States by an employee of an international organization, as defined in Internal Revenue Code section 7701(a)(18), is not considered to be wages for purposes of withholding U.S. federal income taxes.

The term “employee” as used in the preceding sentence includes not only an employee who is a citizen or resident of the United States, but also an employee who is a nonresident alien individual. The term “employee” also includes an officer.

For U.S. citizens, compensation received for services performed as an employee of an international organization is includible in their gross income and is reportable on their U.S. federal income tax returns, even though the compensation may not be subject to withholding of U.S. federal income taxes.  Furthermore, compensation received by a U.S. citizen for services performed within the United States as an employee of a foreign government is subject to self-employment tax.

U.S. citizens and resident aliens paid for services rendered to an international organization or foreign government 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.

References/Related Topics

Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.

Page Last Reviewed or Updated: 03-Feb-2014