Greencard holder working for foreign embassy in the U.S.

[nhu6086]

I am a green card holder and I work for a Foreign Embassy in Washington D.C. I already pay social security and medicare to the foreign country (France) each paycheck. The embassy does not give me a W2, just my total gross income. France and the U.S. have a treaty together to avoid double taxation. Can somebody please give me some specific instructions on how to do this on Turbotax? I am unable to find some clear instructions. The IRS website says "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." but I'm unsure how that translates into Turbotax. (I have the Home & Business version).  Thank you!

[DaveF1006 · Accepted solution]

Yes, you provided an exact quote from this IRS article  that references Employees of a Foreign Government or International Organization - How to Report Compensation.  There is a way to report this in Turbo Tax as other income.

1. Federal >Wages and Income
2. Scroll down to Less Common Income
3. Select Miscellaneous Income
4. Select Other reportable income, select ‘yes’ and you will be prompted to enter Description and amount. For the description Wages from being an employee of a foreign government not subject to FICA taxes and then the amount.

[nhu6086]

Thank you for your response! What about federal taxes? How does that work in this scenario with TurboTax? 

[ThomasM125]

If you report your income as mentioned by @DavidF1006, it will appear as taxable income on your federal income tax return. If you wish to exclude the income as taxable, since you mentioned there is a treaty to that affect, you would need to make the same entry again and enter the amount as a negative number, citing the treaty in your description. Also, you would have to complete form 8833 to describe the treaty exemption, attach it to your return and mail your return in.

Form 8833 Treaty-Based Return Position Disclusure

[Faroukaroua]

to whom who can help me,

I’m a green card holder that works in international organization ( IMF). Im exempt of taxation as my salary is net of taxes. I would like to know how to report my income as wages and if I can do it online and attach my employment verification that states the treaty and that Im exempt of taxation. I used to pay someone to do it and he made me mail my tax return. Could you please tell me what where I should

[ErnieS0]

A green card holder working in a foreign embassy in the U.S. can use TurboTax Online to file their tax return. 

You can prepare online but will have to mail your return. As Tax Expert @ThomasM125 says, you will have to attach Form 8833. TurboTax does not support this form so you will have to prepare it yourself.

Follow the instructions provided by Tax Expert @DaveF1006 to enter income not on a Form W-2.

1. Tap Federal in the left column
2. Select Wages & Income
3. Scroll down to Less Common Income
4. Select Miscellaneous Income
5. Select Other Reportable Income
6. Say YES on “Any Other Taxable Income?” and enter as your description Wages from being an employee of a foreign government not subject to FICA taxes

Next enter the same amount as a negative amount in the same section. The description is Tax Treaty Exclusion

See instructions by Tax Expert Alumni @Leonard at How to claim a tax treaty with Turbotax?

@Faroukaroua

[Prady]

Were you able to get an answer for situation as an IMF employee

[nhu6086]

Yes basically depending on which foreign country it is, you should not be taxed twice if there is a treaty established between the US and that foreign country. So basically add your foreign income as a source of income in turbo tax and then deduct the taxes you already paid through your paychecks to the foreign country as credit so that you don’t get taxed twice. Let me know if that doesn’t make sense still, you should be able to find information on turbo tax about how to enter the extra income and the foreign credit 

[Prady]

 IMF compensation is not subject to us taxation for green card holders, it would be great if anyone from Turbo Tax team can advise on how to report the income as non-taxable in turbo tax

https://www.unclefed.com/TaxHelpArchives/2005/HTML/p519/ch10.html

[DaveF1006]

According to the IRS it its latest publication, 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.

That link that is posted by Prady is from a publication written in 2005 and cannot be trusted as an authoritative source. Besides, this is for aliens that maintain their immigrant status and does not apply to Green Card holders.  Green card holders must report all income from all sources.

Here is how to report your income in Turbo Tax that avoids the self-employment tax issue.

You can report this as other income on TTO.  To report in Turbo Tax Online. 

1. Log into your account
2. Select Wages and income
3. Less Common income
4. Miscellaneous Income, 1099-A, 1099>start
5. Scroll to the bottom of the page to Other Reportable Income
6. Other taxable income, answer yes
7. Then give a brief description of the income and the amount listed. For the description, enter IMF compensation and the amount.

In the end, you will owe federal income taxes on the the gross amount but FICA taxes will not be assessed.

@nhu6086 

[Prady]

Dave,

the IMF and Worldbank are two organizations exempt from us taxation when you are green card holder, there is no gross amount to report on as everything is net pay, could you let us know how to report this income in this situation?

[DaveF1006]

This would be reported in the manner that ErnieS0 stated above.

1. Tap Federal in the left column
2. Select Wages & Income
3. Scroll down to Less Common Income
4. Select Miscellaneous Income
5. Select Other Reportable Income
6. Say YES on “Any Other Taxable Income?” and enter as your description Wages from being an employee of a foreign government not subject to FICA taxes

Once the income is reported and placed in a summary, select the add income button in the summary page. now add the description, IMF Treaty Exclusion and record the income amount you placed in the previous entry with a minus sign in front of it. 

@Prady 

[pk]

@Prady , @nhu6086 ,   while I agree  that IMF and World Bank and some similar international institution employees are immune , such is not the case for US Person employees  of foreign govt. instrumentalities.  They are  exempt from withholding   but  their incomes / compensation are  to be reported on their 1040 and are also subject to SECA taxes.  See the following  page  ( 2023 update :(

Employees of a Foreign Government or International Organization - Federal Income Tax Withholding | I...

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