How do I show World Bank income if an STC and green card holder. It appears that it is tax exempt - but elsewhere the IRS indicates that it must still be reported. How?

[DoninGA]

See this website for how to report your income as an STC - http://siteresources.worldbank.org/INTRMA/Resources/TaxSTCFAQs.pdf

[JJMEE]

Here are the links to the conflicting guidance:

IRS guidance (see section under = Green Card Holders (Lawful Permanent Resident):

https://www.irs.gov/individuals/international-taxpayers/employees-of-a-foreign-government-or-interna...

World Bank guidance (see last statement on last page of PDF):

http://siteresources.worldbank.org/INTRMA/Resources/TaxSTCFAQs.pdf

[JJMEE]

Thank you @DoninGA  - but unfortunately this information is in conflict with that which the IRS has on their webpage. It seems that this is more complicated (or not) for green card holders, that are treated as tax residents by the IRS, but treated differently with regards to tax rules by the WB. 

[DoninGA]

Are you self-employed where you will be receiving a Form 1099-MISC for your compensation?

Or are you being paid as an employee where you will be receiving a W-2?

[JJMEE]

Thanks @Donin - as a green card STC we don't receive either a W2 (which is what an employees would receive) or 1099 (typically for contractors). The work is designated as "short term contractor" so a 1099 would make sense - but all income is paid with tax already withheld (or more precisely - the WB does not actually tax income, but pays you as if you have been).

[JJMEE]

The IRS guidance is:

"If you are a green card holder working for a foreign government or international organization (which includes the WB), you generally must report your earnings as wages but are not subject to self-employment taxes on those earnings and may not voluntarily pay self-employment tax on those earnings."

So my question is - how can i best show this in TurboTax? specifically so that this income is not included in the total estimate of self-employment taxes.

[DoninGA · Accepted solution]

Based on the information shown in this link - http://siteresources.worldbank.org/INTRMA/Resources/TaxSTCFAQs.pdf

I am a short-term consultant (STC) and I hold a U.S. green card. Will I be affected by the change in the
tax classification process?
No, if you are not a U.S. citizen, your Bank Group income is exempt from U.S. income taxes, and is not
reported to the U.S. Internal Revenue Service (IRS).

Your income is exempt and not reported on a US federal tax return.

Contact the IRS for verification -

Call the IRS: 1-800-829-1040 hours 7 AM - 7 PM local time Monday-Friday
When calling the IRS do NOT choose the first option re: "Refund", or it will send you to an automated phone line.
So after first choosing your language, then do NOT choose Option 1 (refund info). Choose option 2 for "personal income tax" instead.
Then press 1 for "form, tax history, or payment".
Then press 3 "for all other questions."
Then press 2 "for all other questions."
- When it asks you to enter your SSN or EIN to access your account information, don't enter anything.
- After it asks twice, you will get another menu.
Then press 2 for personal or individual tax questions.
It should then transfer you to an agent.
Or you can contact your local IRS office. See this IRS website for local IRS offices - http://www.irs.gov/uac/Contact-Your-Local-IRS-Office-1 or call 1-844-545-5640 to set up an appointment

[JJMEE]

Thank you @DoninGA !

[Agoel15]

Hi, did you end up calling IRS to get an answer?  I am in a similar situation and was wondering what the solution is.  Thanks.

[aep1000]

Please let us know what you found out. I am in the same situation.

[ThomasM125]

Per the IRS it seems the income is subject to income tax but not self-employment tax:

Green Card Holders (Lawful Permanent Resident)

If you are a green card holder working for a foreign government or international organization, you generally must report your earnings as wages but are not subject to self-employment taxes on those earnings and may not voluntarily pay self-employment tax on those earnings.

As such, you should enter it in TurboTax by using the following tabs:

1. Wages and Income
2. Less common income
3. Foreign earned income and exclusion
4. Did you make income outside the United States? (yes)
5. What form was income reported on? (stmt from foreign employer)

Enter your World Bank wages and work through the rest of the questions. Indicate that you want to try to exclude your foreign income, but then later say you did not live outside the US if that is true.

The result will be the income will appear on line 1 of form 1040 as wages, but no self-employment or social security tax will be charged.

[too_much_tax_paperwork]

For 'foreign earned income exemption', you have to use either physical presence test or bonafide resident test, neither of which apply.  Without form 2555, you'd still be paying federal income tax.  Also, the IRS asks to report the executive order number in this case, which I'm not sure we can put with TurboTax.

[ReneeM7122]

Yes, those are the requirements for foreign earned income exemption.  Regarding income from an international organization, the IRS states that 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.

 Income for employees of foreign governments or international organizations.

@too_much_tax_paperwork

[too_much_tax_paperwork]

Exactly.  I know it’s exempt but don’t know where to put that on forms and/or TurboTax.  I think now “other income” as negative with description including executive order number.