Wages Paid to Employees of Foreign Governments
If you are an employee of a foreign government (including foreign municipalities) your wages are exempt from U.S. income tax by:
- A provision in a tax treaty or consular convention between the United States and their country, or
- Meeting the requirements of U.S. tax law
Employees of international organizations can exempt their wages from U.S. income tax either by a provision in the international agreement creating the international organization, or 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.
Exemption Under Tax Treaty - Resident Aliens From France
If you are a U.S. resident receiving wages and pensions for governmental services performed for the government of France, you are allowed 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 U.S. government employees.
- To qualify for the exemption under U.S. tax law, either the U.S. Department of State must certify that you perform services similar to those performed by employees of the government of the United States in foreign countries and that your foreign government employer grants an equivalent exemption to U.S. government employees performing similar services in its country or you must establish those facts. However, see the Aliens Who Keep Immigrant Status section below for a special rule that may affect your qualification for this exemption.
- 2. 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. However, see the Aliens Who Keep Immigrant Status section below for a special rule that may affect your qualification for this exemption.
- 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.
- If you are claiming this 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.
- This 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).
- This 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.
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 the U.S. do not qualify for the exemption under U.S. tax law.
Aliens Who Keep Immigrant Status
If you file a waiver (USCIS Form I-508) to keep your immigrant status (green card), 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 under an income tax treaty, consular agreement, or international agreement between the United States and your foreign government employer, or
- You work for an international organization and the international organization 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