TAX PAYER WORKS FOR WORLD BANK

[swiftax]

TP is US Citizen and works for World Bank in DC. On his W2, no social security and medicare tax were deducted but on the W2 it says that " US staff must pay SS and Medicare tax at the self employment rate on wages for services performed inside the US." TP's 2006 return, previous preparer considered the TP as self employed and prepaed schedule C. I am not sure that is accurate but would like to know your opinion.

My other question is how will TP pay the SS and medicare tax. Remember the W2 no tax has also been deducted.

Thanks much

jeff

[cataxdude2002]

TP is US Citizen and works for World Bank in DC. On his W2, no social security and medicare tax were deducted but on the W2 it says that " US staff must pay SS and Medicare tax at the self employment rate on wages for services performed inside the US." TP's 2006 return, previous preparer considered the TP as self employed and prepaed schedule C. I am not sure that is accurate but would like to know your opinion.

My other question is how will TP pay the SS and medicare tax. Remember the W2 no tax has also been deducted.

Thanks much

jeff

You have to fill out just the SE. I used to have a client who was a US cicitizen, working here in San Francisco and was an employee of the Japaneese Government . The US has no jurisdiction to force a foreign government to withold payroll tax.

[JohnH]

I assume you'd report it in the same manner as the way a minister's w-2 is handled. Report the W-2 earnings on the apprpriate line of the 1040 and then attach a Schedule SE & calculate the S/E tax.

[Pacun]

Schedule C, no deductions whatsoever. Any business expenses MUST be reported on 2106. File SE for full amount.

[swiftax]

If they consider him an employee how can he be a self employed? Thanks

[Pacun]

Do you want the solution or you want to know why? If you want to know why, you will have to check the IRS website.

Again, File Schedule C, SE for full amount, any deductions you have to take them on 2106 because taxpayer is NOT a statutory employee. These people are paid their salary and on top of that... they are paid the employer's share of social security. So, if they hire you and they say, "we are going to pay you $100K yearly but we are not going to withhold any taxes for you, so we are going to pay you $107,650 and you are responsible for all taxes"