Employees of foreign governments (including foreign municipalities) have two ways to get exemption of their governmental wages
from U.S. income tax:
Employees of international organizations can exempt their wages either by a provision, if one exists, in the international
agreement creating the international organization, or by meeting the requirements of U.S. tax law.
The exemption discussed in this chapter applies only to pay received for services performed for a foreign government or international
organization. Other U.S. income received by persons who qualify for this exemption may be fully taxable or given favorable
treatment under an applicable tax treaty provision. The proper treatment of this kind of income (interest, dividends, etc.)
is discussed earlier in this publication.
Exemption Under Tax Treaty
If you are from a country that has a tax treaty with the United States, you should first look at the treaty to see if there
is a provision that exempts your income. The income of U.S. citizens and resident aliens working for foreign governments usually
is not exempt. However, in a few instances, the income of a U.S. citizen with dual citizenship may qualify. Often the exemption
is limited to the income of persons who also are nationals of the foreign country involved.
Exemption Under U.S. Tax Law
Employees of foreign governments who do not qualify under a tax treaty provision and employees of international organizations
may qualify for exemption by meeting the following requirements of U.S. tax law.
The exemption under U.S. tax law applies only to current employees and not to former employees. Pensions received by former
employees living in the United States do not qualify for the exemption discussed here.
Employees of foreign governments.
If you are not a U.S. citizen, or if you are a U.S. citizen but also a citizen of the Philippines, and you work for
a foreign government in the United States, your foreign government salary is exempt from U.S. tax if you perform services
similar to those performed by U.S. government employees in that foreign country and that foreign government grants an equivalent
exemption to U.S. government employees.
Certification.
To qualify for the exemption under U.S. tax law, either the Department of State must certify that you perform services
similar to those performed by employees of the government of the United States in foreign countries and that your foreign
government employer grants an equivalent exemption to U.S. government employees performing similar services in its country
or you must establish those facts. However, see
Aliens who keep immigrant status
, later, for a special rule that may affect your qualifying for this exemption.
Employees of international organizations.
If you work for an international organization in the United States and you are not a U.S. citizen (or you are a U.S.
citizen but are also a citizen of the Philippines), your salary from that organization is exempt from U.S. tax. However, see
Aliens who keep immigrant status
, later, for a special rule that may affect your qualifying for this exemption.
An international organization is an organization designated by the President of the United States through Executive
Order to qualify for the privileges, exemptions, and immunities provided in the International Organizations Immunities Act.
You should find out if you have been made known to, and have been accepted by, the Secretary of State as an officer
or an employee of that organization, or if you have been designated by the Secretary of State, before formal notification
and acceptance, as a prospective officer or employee.
If you are claiming exemption, you should know the number of the Executive Order covering the international organization
and should have some written evidence of your acceptance or designation by the Secretary of State.
The exemption is denied when, because the Secretary of State determines your presence in the United States is no longer
desirable, you leave the United States (or after a reasonable time allowed for leaving the United States). The exemption is
also denied when a foreign country does not allow similar exemptions to U.S. citizens. Then the Secretary of State can withdraw
the privileges, exemptions, and immunities from the nationals of that foreign country.
Aliens who keep immigrant status.
If you file the waiver provided by section 247(b) of the Immigration and Nationality Act (USCIS Form I-508) to keep
your immigrant status (green card), you no longer qualify for the exemption from U.S. tax under U.S. tax law from the date
of filing the waiver with the Attorney General.
However, you do not lose the exemption if you file the waiver, and meet either of the following conditions.
-
You are exempt from U.S. tax under an income tax treaty, consular agreement, or 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. Two international organizations that have such a provision
are the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (World Bank).
.
For more information about a specific foreign country or international organization, send an email to
embassy@irs.gov.
