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shamir ali
Mar 13, 2008, 01:39 PM
Hi,

Currently I am providing software development services from Pakistan (offshore) to a U.S.A based software development company, and they are saying that they will withhold 30% of the amount which is agreed between us for my services.

I am also paying income tax in Pakistan, do they really need to withhold this amount or is there any examption from U.S.A point of view or anything can help for the reduction of 30% amount?

I have found following Tax Treaty agreement between Pakistan/U.S.A but I am unable to understand it correctly.

Regards,
Shamir
AtlantaTaxExpert
May 1, 2008, 09:31 AM
Shamir:

No money should be withheld from your payment, because your income, being earned OUTSIDE of the U.S., is NOT subject to U.S. income taxes.

It is probably too late to stop the withholding, so you will need to fle Form 1040NR to get the withholding back, but for 2008 and beyond, NO money should be withheld.