Independent contractor workers employed by US employers

Do you need to report or deduct the advance tax to the IRS when paying the independent contractor?

This depends on the tax status of the independent contractor and whether the work or service is done outside the United States or outside the United States. Let’s talk about the following situations:


1) Independent contractors employed by US employers are foreigners outside the United States

If all work or services are carried out and completed outside the United States, it is considered that she does not have income from the United States, and the US employer does not need to report to the IRS or pre-deduct the advance tax.

What needs to be done:

  • Nothing needs to be done


2) Independent contractors employed by US employers are foreigners in the United States whose visa is to allow her to work in the United States

The identity of a single visa is not determined by whether a foreigner needs to pay taxes, but rather depends on where the work or service is completed to determine the source of income.

If the foreigner lives in the United States and the service is conducted in the United States, the employer is required to deduct a 30% advance tax before making the payment.

However, there are two exceptions that do not require a 30% deduction. If the foreigner’s home country and the United States have a tax treaty that allows for prepayment or prepayment at a lower tax rate. If the foreigner requests this exemption exemption, the 8233 form must be submitted to the employer who employs her.

The second exception is if an independent contractor stays in the US for a long period of time and becomes a tax resident through a 183-day stay test on tax, even if there is no visa to reside. Then his advance tax rate is the same as that of a US citizen or resident, not 30%.