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Bird

Foreign employees

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Funny that there should be a similar thread popping up just when I'm about to post this, but I'll start fresh.

I have an employer with an employee who lives and works in Taiwan - not a US citizen. The employer say he "...is an employee but pays no [uS] taxes."

At the moment, the plan does not exclude non-resident aliens, but I'm not quite sure what his status is - all of the discussion I've seen on resident vs. non-resident alien seems to assume some US presence; maybe it's a given that someone getting paid by a US company and living in a foreign country is a non-resident alien but that wasn't obvious to me.

The plan says ""Employee" means any individual who is employed by the Employer..." There's no built-in exclusion for non-US citizens with no US presence.

Assuming that the intent is that this person is not to be in the plan, do I just check the box to exclude non-resident aliens and figure that covers it, or am I missing some implicit thing that keeps such a person out, or...something else?

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I've spun my wheels on this issue (same or similar) before and always found researching it to be a chore. I vaguely recall there is a pub that defines nonresident alien. Off the cuff, I'd say yeah, a non-U.S. citizen living outside the U.S. is a nonresident alien. The fact that the dude doesn't get a W-2 or get paid in dollars or have any withholding may mean he doesn't have any plan comp even if NRAs aren't excluded. There may be a tax treaty.

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Guest Sieve

Bird --

Your employee is a non-resident alien. I think the issue really is whether that individual has US source income, since the language in that box generally excludes only those who are excludable under IRC Section 410(b), and having no US source income is part of that exclusion.

As per IRC Sections 410(b)(3)© & 861(a)(3), I don't think this is US source income (since it is not income for services performed in the US). So, for this person, checking the box ought to do it.

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Thanks for all of the prompt replies! It turns out that although the name was on a payroll report (an incomplete report with no wages) and the client said he was an "employee", he actually gets a 1099. So never mind...

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Guest beckam

Any employer is responsible for paying the employer's share of payroll taxes, for depositing tax withheld from the employees' paychecks, preparing various reconciliation reports, accounting for the payroll expense through their financial reporting, and filing payroll tax returns. As you see this suite of employer payroll tax responsibilities is far above issuing paychecks to employees. Generic viagra 50mg

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glad you got the answers and better facts from the client!

Just want to add one clarification in case this comes up again. Resident vs. non-resident alien refers to a person's status under immigration law. Basically, if the person is a greencard holder, regardless of where they actually live, they are considered a resident alien and are subject to U.S. tax law (which applies to benefits). If they do not have a greencard, they are usually a non-resident alient. It's possible to have someone living and working in the U.S. and be a non-resident alien (think of foreign students working in the cafeteria at college). And vice versa, you can have a greencard holder working for a U.S. company in Taiwan and be considered a resident alien.

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glad you got the answers and better facts from the client!

Just want to add one clarification in case this comes up again. Resident vs. non-resident alien refers to a person's status under immigration law. Basically, if the person is a greencard holder, regardless of where they actually live, they are considered a resident alien and are subject to U.S. tax law (which applies to benefits). If they do not have a greencard, they are usually a non-resident alient. It's possible to have someone living and working in the U.S. and be a non-resident alien (think of foreign students working in the cafeteria at college). And vice versa, you can have a greencard holder working for a U.S. company in Taiwan and be considered a resident alien.

I believe that your definition is correct as to their tax status. For plan purposes a non-resdient alien is clearly defined as a non US citizen with no US source income. There is no reference to green card status.

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glad you got the answers and better facts from the client!

Just want to add one clarification in case this comes up again. Resident vs. non-resident alien refers to a person's status under immigration law. Basically, if the person is a greencard holder, regardless of where they actually live, they are considered a resident alien and are subject to U.S. tax law (which applies to benefits). If they do not have a greencard, they are usually a non-resident alient. It's possible to have someone living and working in the U.S. and be a non-resident alien (think of foreign students working in the cafeteria at college). And vice versa, you can have a greencard holder working for a U.S. company in Taiwan and be considered a resident alien.

Two things: First, do you have a source for the use of the green card test? The best I have been able to find is that it *may* be a a two part test, where "resident" means EITHER a green card holder, OR an individual with a "substantial presence" in the country - defined as (among other conditions) being in country 31 days this year, and 183 days within the last three years (current year included). *BUT* I've not found anything that actually imposes this definition on qualified retirement plans, through the 410(b) exclududible employees section.

Second, the non-citizen college kid working in the school cafeteria would have U.S. source income, and wouldn't be excludible under 410(b)....

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