If you are an employee of a foreign government (including a foreign political subdivision) you may be able to exempt your foreign government compensation from U.S. income tax either under a provision, if one exists, in an applicable tax treaty or other international agreement, or by meeting the requirements of U.S. tax law. If you are an employee of an international organization you may be able to exempt your international organization compensation from U.S. income tax either under a provision, if one exists, in the international agreement creating the international organization, or by meeting the requirements of U.S. tax law. 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). The tax exemptions described above apply only to compensation you receive for official services performed for the foreign government or international organization. These tax exemptions do not apply to any other U.S. source income you may earn such as interest, dividends, rents, or royalties. Employees of foreign governments Exemption under Vienna Conventions or a bilateral consular agreement You should first look at the tax exemption provisions under the multilateral Vienna Convention on Diplomatic Relations, the multilateral Vienna Convention on Consular Relations, or a bilateral consular agreement between the United States and the foreign country (if one exists) to see if your compensation qualifies for exemption from U.S. income tax under those provisions. Generally, you are not entitled to the income tax exemption available under either of the Vienna Conventions or a bilateral consular agreement if you are a U.S. citizen or resident alien. For further information regarding the Vienna Conventions and bilateral consular conventions, email the Department of State Office of Foreign Missions at OFMAssistants@state.gov. Exemption under tax treaty If you do not qualify for the tax exemption provided under the Vienna Conventions or a bilateral consular agreement but are from a country that has an income tax treaty with the United States, you should look at the tax treaty to see if there is a provision that exempts your compensation from U.S. tax. If you are a U.S. citizen or resident alien working in the United States for a foreign government, your compensation usually is not exempt. For more information, see the Wages and Pensions Paid by a Foreign Government section of Publication 901, U.S. Tax Treaties. Exemption under U.S. tax law Employees of foreign governments who do not qualify under the tax exemption provisions of either of the Vienna Conventions, a bilateral consular convention, or an income tax treaty may be able to exempt their foreign government compensation from U.S. income tax if they satisfy the requirements under U.S. tax law. If you are not a U.S. citizen (or if you are a U.S. citizen but also a citizen of the Republic of the Philippines) and you work for a foreign government in the United States, your foreign government salary is exempt from U.S. income tax if (1) you perform services of a similar character to those performed by U.S. government employees in foreign countries and (2) the country of your foreign government employer grants an equivalent tax exemption to U.S. government employees performing similar services in its country. To claim the tax exemption, you must be able to demonstrate that you satisfy both U.S. tax law requirements. If you are a green card holder employee of a foreign government, you must also be able to demonstrate with written evidence from U.S. Citizenship and Immigration Services (USCIS) that you have not signed and filed USCIS Form I-508. Certification A Department of State certification, if one has been issued, is the simplest method to establish that you meet the similar services and equivalent tax exemption requirements but is not required to qualify for the U.S. tax law exemption. For information about whether a certification has been issued and whether such certification is currently valid and applicable to you, email the Department of State Office of Foreign Missions at OFMAssistants@state.gov. Where no valid certification exists, you must establish with other written evidence that you perform services of a similar character to those performed by U.S. government employees in foreign countries and that the country of your foreign government employer grants an equivalent exemption to U.S. government employees performing similar services in its country. Caution: Your compensation is not eligible for exemption under U.S. tax law if you are employed by a "controlled commercial entity" or your services are primarily in connection with a commercial activity of the foreign government (within or outside the United States). A controlled commercial entity is an entity that is 50% or more owned by a foreign government that is engaged in commercial activity within or outside the United States. The tax exemption applies only to current foreign government employees and not to former employees. Pensions received by former employees of foreign governments living in the United States do not qualify for the exemption discussed here. The exemption under U.S. tax laws does not apply to employees who sign the waiver provided by section 247(b) of the Immigration and Nationality Act (USCIS Form I-508) to obtain or retain lawful permanent resident status (green card). See the section below on Individuals who obtain or retain immigrant (lawful permanent resident) status. The exemption under U.S. tax law does not apply to independent contractors. Common law rules apply to determine whether you are an employee or an independent contractor. See Publication 1779, Independent Contractor or Employee PDF, and Publication 15-A, Employer’s Supplemental Tax Guide. Employees of international organizations Exemption under international organization agreement Many agreements that establish international organizations contain a provision that may exempt your compensation from U.S. income tax. If you are employed by an international organization in the United States, first look to see if the international agreement establishing the international organization you are employed by has such a provision and whether you qualify under it. Generally, these provisions will not exempt compensation of U.S. citizen and resident alien employees. To claim an exemption under a provision in an international organization agreement, if one exists, you must: Know the number of the Executive Order designating the organization as an international organization, Know the article number of the international organization agreement tax exemption provision, and Be able to demonstrate that you meet the requirements of that provision. Exemption under U.S. tax law If the international agreement creating the international organization you are employed by does not contain a tax exemption provision and you are not a U.S. citizen (or if you are a U.S. citizen but also a citizen of the Republic of the Philippines), you may be able to exempt your compensation under U.S. tax law. To claim the exemption, you must be able to demonstrate that you meet the requirements of U.S. tax law. Caution: The exemption under U.S. tax law applies only to current international organizations employees and not to former employees. Pensions received by former employees of international organizations living in the United States do not qualify for the exemption discussed here. The exemption under U.S. tax laws does not apply to employees who sign the waiver provided by section 247(b) of the Immigration and Nationality Act (USCIS Form I-508) to obtain or retain lawful permanent resident status (green card). See the section below on Individuals who obtain or retain immigrant status. The exemption under U.S. tax law does not apply to independent contractors. Common law rules apply to determine whether you are an employee or an independent contractor. See Publication 1779, Independent Contractor or Employee PDF, and Publication 15-A, Employer’s Supplemental Tax Guide. Individuals who obtain or retain immigrant (lawful permanent resident) status If you sign the waiver provided by section 247(b) of the Immigration and Nationality Act (USCIS Form I-508) to obtain or retain your lawful permanent resident status (green card), you no longer qualify for the tax exemption under U.S. tax law from the date of filing the waiver. Note: The filing of USCIS Form I-508 has no effect on a tax exemption that is not dependent upon the provisions of U.S. tax law. You do not lose the tax exemption if you file the waiver and meet either of the following conditions: You work for a foreign government and are exempt from U.S. tax under an income tax treaty, consular agreement, the Vienna Conventions, or any other international agreement between the United States and your foreign government employer. 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. U.S. citizens and resident aliens employed by a foreign government or international organization in the United States 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. References/Related topics List of designated international organizations by Executive Order (22 U.S.C. 288) Employees of a foreign government or international organization - Federal income tax withholding Employees of a foreign government or international organization - Federal Insurance Contributions Act (FICA) including Social Security and Medicare tax Employees of a foreign government or international organization - Federal Unemployment Tax (FUTA)
