Services for foreign government Compensation for services performed as an employee of a foreign government is not considered to be wages for purposes of withholding U.S. federal income tax. These include services performed by ambassadors, other diplomatic and consular officers and employees, and nondiplomatic representatives. This exception from wages applies regardless of the citizenship or residence of the employee and the place where the services are performed. However, compensation for services performed for a U.S. or Puerto Rican corporation owned by a foreign government is generally considered wages for purposes of withholding U.S. federal income taxes at the graduated rates. 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 should refer to Employees of a Foreign Government or International Organization - How to Report Compensation for instructions on how to file their U.S. federal individual income tax returns. Services for international organization Compensation for services performed as an employee or an officer of an international organization is not considered to be wages for purposes of withholding U.S. federal income tax. This exception from wages applies regardless of the citizenship or residence of the employee and the place where the services are performed. The term "international organization" means a public international organization that the President of the United States has designated by Executive Order as being entitled to the privileges, exemptions, and immunities provided under the International Organizations Immunities Act (22 U.S.C. 288-288f). For U.S. citizens, compensation received for services performed as an employee of an international organization is includible in 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 an international organization is subject to self-employment tax. U.S. citizens and resident aliens paid for services rendered to an international organization should refer to Employees of a Foreign Government or International Organization - How to Report Compensation for instructions on how to file their U.S. federal individual income tax returns. Related Employees of Foreign Governments or International Organizations IRC Section 3401(a)(5) Treasury Regulation §31.3401(a)(5)-1 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.
