USA Taxes and Regulations

[Britkid]

I tried googling this one, but it seems like most of the answers I found were for different cases so maybe it's quicker to get the answer here.

I have one key question which I'll put at the end, but first some background.

I received a job offer from a US company.

This would be the first time I was employed by a US company out of a US office. Previously, I was employed by UK companies.

I would not be an employee but a contractor/consultant.

I am not American (with a name like Britkid this may not come as a huge surprise).

I have no property in, or ties to the US. I only live in Chile.In a typical year, I go to the US between 0 and 2 weeks, but in the future this will most likely be zero. Certainly not for months.

I would carry out the engagement remotely in Chile from my house (home office). Most likely, I won't even need to visit the US.

Actually, we will probably (TBC) handle the payments via the UK. They are going to fix the payments in $US, but since the company has a UK bank account, and so do I, the arrangement will probably be to send £, but with a different amoutn each month depending on the $US exchange rate. As this will be easier than making an international payment in dollars.

The company I would be working for does not have any other employee, contractor or consultant in Chile, and does not have an office here, or any other activities here.

I am going to get paid the total gross amount and then just pay taxes/ declare earnings only in Chile.

So is it reasonable to assume I won't have to pay any taxes in the US, or make any declarations, or fill in any forms, or deal with any authorities or government bodies in the US?

[Britkid]

Also, the contract contains this:

This AGREEMENT shall be governed by and construed in accordance with the laws of the State of Texas applicable to AGREEMENTS made and to be performed in that State, and CLIENT and CONSULTANT hereby agrees to the jurisdiction of the State of Texas, and to the federal and state courts of Lubbock County, Texas.

[snobrd4life]

Look up W8-BEN form from IRS website as you will be acting as a 3rd party contractor on a full time basis.

[admin]

Sure looks like you are not subject to any taxes in the U.S.

[jehturner]

The situation you describe is a lot like mine, except that I work directly for the organization based in the US (and it's treated as an International Organization in Chile, but that should be irrelevant here). I only pay US taxes when I'm visiting the US for work occasionally and only file a US tax return if I earn more than a few k (forget the exact limit) while I'm there.

[admin]

The situation you describe is a lot like mine, except that I work directly for the organization based in the US (and it's treated as an International Organization in Chile, but that should be irrelevant here). I only pay US taxes when I'm visiting the US for work occasionally and only file a US tax return if I earn more than a few k (forget the exact limit) while I'm there.

yea, there is a threshold (with a bunch of complex exceptions) of days in the u.s. and how "tied" your work is to the United States.

Probably biggest one is do you have a green card? If you do, they can abuse you like the other inmates at the zoo.

[Britkid]

Thanks for your help:

W8BEN form
https://www.irs.gov/pub/irs-pdf/fw8ben.pdf

Instructions for Form W-8BEN
https://www.irs.gov/instructions/iw8ben

From the second link.

"If you receive certain types of income, you must provide Form W-8BEN to:

Establish that you are not a U.S. person;

Claim that you are the beneficial owner of the income for which Form W-8BEN is being provided or a foreign partner in a partnership subject to section 1446; and

If applicable, claim a reduced rate of, or exemption from, withholding as a resident of a foreign country with which the United States has an income tax treaty and who is eligible for treaty benefits."

Not totally clear to me, but possibly suggests that fill should be filled in. However I'm not a huge fan of needless bureaucracy. I might fill it in if the company I'm working to or the US authorities request me to do so, otherwise may as well stay off their radar?

[jehturner]

I think one usually encounters that form in connection with US investments (which you might have if the organization paying you were to contribute to a retirement account, but probably not as a contractor). Each broker etc. that's paying you income/gains from US-based funds (as opposed to funds invested in the US) will probably send you one, even if they're not based in the US themselves. I don't recall ever completing one in direct connection with my employment contract (though it has been 19 years); I don't think that's what it's for.

[jehturner]

Obviously you can't claim the US-Chile tax treaty anyway, since (as far as I know) it still hasn't been ratified. So any income paid out to you in connection with this form will probably have 30% tax withholding.

[snobrd4life]

Thanks for your help:

W8BEN form
https://www.irs.gov/pub/irs-pdf/fw8ben.pdf

I might fill it in if the company I'm working to or the US authorities request me to do so, otherwise may as well stay off their radar?

I worked in procurement for foreign consultants and service providers for my company. We required the W8BEN to be filled out and submitted for all independent contractors and foreign entities receiving payments from our company's US entity.

You will probably have to fill it out. Consider it rubber stamp in terms of effort involved compared to being a US resident having to file a full tax return.