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Important
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For information call now:
(347) 989-4566
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Additional information
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Internal Revenue Service
Austin Service Center
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342
IN
1-800-829-1040
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Independent Contractors
If there is no employee-employer relationship between you and the person for
whom you perform services, your compensation is subject to the 30% (or lower
treaty) rate of withholding. However, if you are engaged in a trade or business
in the United States during the tax year, your compensation for personal
services as an independent contractor (independent personal services) may be
entirely or partly exempt from withholding if you reach an agreement with the
Internal Revenue Service on the amount of withholding required. An agreement
that you reach with the IRS regarding withholding from your compensation for
independent personal services is effective for payments covered by the agreement
after it is agreed to by all parties. You must agree to timely file an income
tax return for the current tax year.
If you are a nonresident alien entertainer or athlete performing or
participating in athletic events in the United States, you may be able to enter
into a withholding agreement with the IRS for reduced withholding provided
certain requirements are met. Under no circumstances will such a withholding
agreement reduce taxes withheld to less than the anticipated amount of income
tax liability. File Form 13930 and the required attachments with the IRS to
request a central withholding agreement. Either you or your authorized
representative can file the form. It should be sent to the IRS at least 45 days
before the agreement is to take effect. Exceptions will be considered on a case
by case basis.
Your final payment of compensation during the tax year for
independent personal services may be entirely or partly exempt from withholding.
This exemption is available only once during your tax year and applies to a
maximum of $5,000 of compensation. To obtain this exemption, you or your agent
must give the following statements and information to the Commissioner or his
delegate.
� A statement by each withholding agent from whom you have received gross income
effectively connected with a trade or business in the United States during the
tax year, showing the amount of income paid and the tax withheld. Each statement
must be signed by the withholding agent and verified by a declaration that it is
made under penalties of perjury.
� A statement by the withholding agent from whom you expect to receive the final
payment of compensation, showing the amount of the payment and the amount of tax
that would be withheld if a final payment exemption were not granted. This
statement must also be signed by the withholding agent and verified by a decla
ration that it is made under penalties of perjury.
� A statement by you that you do not intend to receive any other income
effectively connected with a trade or business in the United States during the
current tax year. � The amount of tax that has been withheld or paid under any
other provision of the Internal Revenue Code or regulations for any income
effectively connected with your trade or business in the United States during
the current tax year.
� The amount of your outstanding tax liabilities, if any, including interest and
penalties, from the current tax year or prior tax periods.
� Any provision of an income tax treaty under which a partial or complete
exemption from withholding may be claimed, the country of your residence, and a
statement of sufficient facts to justify an exemption under the treaty.
� A statement signed by you, and verified by a declaration that it is made under
penalties of perjury, that all the information given is true and that to your
knowledge no relevant information has been omitted.
If satisfied with the information, the IRS will determine the amount of your
tentative income tax for the tax year on gross income effectively connected with
your trade or business in the United States. Ordinary and necessary business
expenses can be taken into account if proven to the satisfaction of the
Commissioner or his delegate.
The Commissioner or his delegate will send you a letter, directed to the
withholding agent, showing the amount of the final payment of compensation that
is exempt from withholding and the amount that can be paid to you because of the
exemption. You must give two copies of the letter to the withholding agent and
must also attach a copy of the letter to your income tax return for the tax year
for which the exemption is effective.
Withholding on payments for independent personal services is
generally based on the amount of your compensation payment minus the value of
one exemption.
To determine the income for independent personal services performed in the
United States to which the 30% (or lower treaty) rate will apply, you are
allowed one personal exemption if you are not a U.S. national and are not a
resident of Canada, Mexico, or South Korea. To claim an exemption from
withholding on the personal exemption amount, fill out the applicable parts of
Form 8233 and give it to the withholding agent.
If you are a nonresident alien who is a resident of Canada, Mexico, or
South Korea, or who is a national of the United
States, you are subject to the same 30% withholding on your compensation for
independent personal services performed in the United States.
If you are a resident of South Korea, you are allowed personal
exemptions for yourself and for your spouse and children who live with you in
the United States at any time during the tax year. However, the additional
exemptions for your spouse and children must be further prorated.
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