Introduction And Residence
Generally speaking, the US is not an attractive location for resident expatriate executives seeking to limit taxation.

Taxation Of Resident Alien
Tax-resident foreign nationals in the US are taxed just about on the same basis as a US national.

Taxation Of Non-Resident Aliens
The US tax position of a non-resident alien is reasonably favourable.

Tax Treaties
A resident or nonresident alien from a country with which the United States has an income tax treaty may qualify for certain benefits.

Services For Foreign Employer
If a non-resident alien is paid by a foreign employer, his or her US source income may be exempt from US tax.

Social Security And Medicare Taxes
Resident aliens, in general, have the same liability for Social Security/Medicare Taxes as US citizens.

Totalization Agreements
TheUS has agreements with some foreign countries to avoid double payment of social security taxes.

Information provided on this site is for general guidance only and is often simplified. Actual IRS procedures are complex, and taxpayers should obtain professional assistance or use IRS sources for complete information.

Tax Treaties

A nonresident alien from a country with which the United States has an income tax treaty may qualify for certain benefits. The US has income tax treaties with a number of foreign countries. Under these treaties, residents of foreign countries are taxed at a reduced rate, or are exempt from US income taxes on certain items of income they receive from sources within the US. These reduced rates and exemptions vary among countries and specific items of income.

If a treaty does not cover a particular kind of income , or if there is no treaty between the alien non-resident's home country and the US, he or she must pay tax on the income in the same way as a US national. Many of the individual states of the US tax the income of their residents, thus an individual should consult the tax authorities of the relevant state to find out if that state taxes the income of individuals and, if so, whether the tax applies to any of his or her income.

Tax treaties effectively reduce the US taxes of residents of foreign countries. They give substantial benefits to non-residents over US citizens or residents, who are subject to US income tax on their worldwide income.

Most treaties require that the alien be a resident of the treaty country to qualify. However, some treaties require that the alien be a national or a citizen of the treaty country. An individual can generally arrange to have withholding tax reduced or eliminated on wages and other income that is eligible for tax treaty benefits.

Tax treaties are very important as regards withholding tax; if an individual's home country has a double tax treaty with the US (most high-tax countries do) then the rates of withholding tax payable may well be less than 30%.

Generally, to prove entitlement to the benefits of a tax treaty to a foreign country, the applicant must provide a US Government certification that a US tax return was filed.

The taxing authorities of Italy and Spain however do not accept the certification of filing a tax return as valid proof of a US residence. If a certification for Spain or Italy is needed, the applicant must submit with the request for a certification a signed statement to the IRS under penalties of perjury that states the following:

• The applicant is a US resident individual or corporation,
• The applicant does not have a permanent establishment in Italy or Spain (specify the country),
• The applicant's permanent street address, and
• The applicant's state of incorporation (for corporations only).

If a taxpayer takes the position that any US tax is reduced or potentially reduced by a US treaty (a treaty-based position), the taxpayer generally must disclose that position on a US tax return. If the taxpayer is otherwise not required to file a tax return because no tax is owed, a return still has to be filed reporting the taxpayer's treaty-based position. This disclosure requirement does not apply to a reduced rate of withholding tax on income that is not connected with a US trade or business, such as dividends, interest, rents, or royalties. It also does not apply to a reduced rate of tax on pay received for services performed as an employee, including pensions, annuities, and social security.

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Introduction And Residence
Generally speaking, the US is not an attractive location for resident expatriate executives seeking to limit taxation.

Taxation Of Resident Alien
Tax-resident foreign nationals in the US are taxed just about on the same basis as a US national.

Taxation Of Non-Resident Aliens
The US tax position of a non-resident alien is reasonably favourable.

Tax Treaties
A resident or nonresident alien from a country with which the United States has an income tax treaty may qualify for certain benefits.

Services For Foreign Employer
If a non-resident alien is paid by a foreign employer, his or her US source income may be exempt from US tax.

Social Security And Medicare Taxes
Resident aliens, in general, have the same liability for Social Security/Medicare Taxes as US citizens.

Totalization Agreements
TheUS has agreements with some foreign countries to avoid double payment of social security taxes.