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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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Time Basis
Use a time basis to figure your U.S. source compensation (other than the fringe
benefits discussed later). Do this by multiplying your total compensation (other
than the fringe benefits discussed later) by the following fraction:
Number of days you performed services
in the United States during the year
______________________________
Total number of days you performed
services during the year
You can use a unit of time less than a day in the above fraction, if
appropriate. The time period for which the compensation is made does not have to
be a year. Instead, you can use another distinct, separate, and continuous time
period if you can establish to the satisfaction of the IRS that this other
period is more appropriate.
Example 1.
Christina Brooks, a resident of the Netherlands, worked 240 days for a U.S.
company during the tax year. She received $80,000 in compensation. None of it
was for fringe benefits. Christina performed services in the United States for
60 days and performed services in the Netherlands for 180 days. Using the time
basis for determining the source of compensation, $20,000 ($80,000 . 60/240) is
her U.S. source income.
Example 2.
Rob Waters, a resident of South Africa, is employed by a corporation. His annual
salary is $100,000. None of it is for fringe benefits. During the first quarter
of the year he worked entirely within the United States. On April 1, Rob was
transferred to Singapore for the remainder of the year. Rob is able to establish
that the first quarter of the year and the last 3 quarters of the year are two
separate, distinct, and continuous periods of time. Accordingly, $25,000 of
Rob�s annual salary is attributable to the first quarter of the year (.25 .
$100,000). All of it is U.S. source income because he worked entirely within the
United States during that quarter. The remaining $75,000 is attributable to the
last three quarters of the year. During those quarters, he worked 150 days in
Singapore and 30 days in the United States. His periodic performance of services
in the United States did not result in distinct, separate, and continuous
periods of time. Of his $75,000 salary, $12,500 ($75,000 . 30/180) is U.S.
source income for the year.
Multi-year compensation. The source of multi-year compensation is generally determined on a time basis
over the period to which the compensation is attributable. Multi-year
compensation is compensation that is included in your income in one tax year but
that is attributable to a period that includes two or more tax years.
You determine the period to which the compensation is attributable based on the
facts and circumstances of your case. For example, an amount of compensation
that specifically relates to a period of time that includes several calendar
years is attributable to the entire multi-year period.
The amount of compensation treated as from U.S. sources is figured by
multiplying the total multi-year compensation by a fraction. The numerator of
the fraction is the number of days (or unit of time less than a day, if
appropriate) that you performed labor or personal services in the United States
in connection with the project. The denominator of the fraction is the total
number of days (or unit of time less than a day, if appropriate) that you
performed labor or personal services in connection with the project.
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