Page 213 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
If another country requires the withholding of income taxes for
income earned while working there, then a company does not have to
also withhold U.S.taxes,since this would be regarded as double taxation.
If an employee qualifies for the foreign earned income exclusion,

he or she can exclude the first $80,000 of foreign earned income from
his or her gross income, but only if that employee’s home during the
tax year is considered to be abroad, or he or she is physically present in
the foreign country for 330 full days out of a 12-month period (which
does not have to correspond to a calendar year).The exclusion must be
formally elected by filling out either Form 2555 or Form 2555-EZ.

Payroll Taxes for Aliens

An employer is required to withhold all types of taxes for resident
aliens. Holders of the I-551 Permanent Resident Card (“Green Card”)
fall into this category.However,employers do not withhold Social Security
or Medicare taxes if the alien is an agricultural worker or holds a variety
of nonimmigrant visas, such as F-1 (students), H-1B (professionals and
technical workers), or Q (cultural exchange visitors).
A nonresident alien is required to complete a W-4 form. When

doing so, the person cannot claim exemption from withholding, must
state his or her marital status as being single, and in most cases can only
claim one allowance.

Registering with the Government for
Tax Remittances

When a company sends payroll tax remittances to the federal govern-
ment, the government needs to identify the company so it can give the
company proper credit for the remittances.This is done with an Employer
Identification Number (EIN).An employer applies for an EIN number
using the Application for Employer Identification Number, Form SS-4,

186