Can I File a W2 Form for Payments Made to a Foreign Employee?

Yes, there are scenarios when it is not only common but is expected of U.S. companies to file a W2 form for payments made to a foreign employee. An employer who decides to hire non-U.S. citizens or residents to provide in-country services must report and withhold the federal income taxes in specific ways. The Internal Revenue Service outlines the following steps:

Identification – Make a note of all the non-U.S. citizens that you employ on your business’s payroll.

Division – Distinguish the residency statuses of each of these non-U.S. citizen employees.

Classification Treatment – Manage income tax withholding the same way for any foreign-born, U.S. residents as you handle it for U.S. citizens. Refer to Chapter 9 of Publication 15 (Circular E) and Publication 515, Withholding Taxes on Nonresident Aliens for your non-resident workers.

Filing a Form W2 for a foreign employee is typically required to collect the state and local wage amounts. It also allows you to report the state and local income taxes that you withheld from the wages. You can still use Form W2 for these purposes even if all of a foreign employee’s wages are exempt from the federal income tax and you would otherwise use Form 1042-S.

Filing W2 forms is efficient and straightforward with our two distinctive E-File options. Download our free demo software today to explore the different features using our E-File Direct (add-on) or the E-File Services.

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