[sahil80]

Folks - I am from Pakistan and came to US on F1. I am on my OPT in US and doing a job with a local company here - I filed my taxation for 2010 earlier this year.

In August 2011 I did some offshore work for a local business here - and they want me to file them W-8BEN form.

1- Is this a correct form and what this form actually means?
2- Do I still have to file this income when I file taxation for 2011 next year? Considering this work was performed by my wife's business in my home country.

Pleas help - confusion is on its height!

[AtlantaTaxExpert]

The W-8BEN is submitted to claim tax exemption under a treaty provision from the U.S.-Pakistan Tax Treaty.

If the work was done offshore by your wife's business, and you were only the intermediary and collected NONE of the money for the work, then it is covered under the tax treaty, and the Form W-8BEN would be appropriate.

However, if YOU got paid while present in the U.S. (even if the work was done in Pakistan), then the IRS would consider you to be the "permanent establishment" provided for in the treaty, which means the income IS subject to U.S. income taxes.

If you want specific advice, email me at [email protected].

[sahil80]

Thank you for replying.

1- How do you define "if you got paid" - does this mean if I was issued a check on my name and I deposit it into my US account?
2- If I get the check issued to the name of business and have it deposited in my home country I won't have to file it on my tax return - correct?

[AtlantaTaxExpert]

1) If you get the check in YOUR name, the IRS will, by default, consider the money to be U.S.-soruce under YOUR name and thus subject to U.S. income (and probably self-employment) taxes.

2) The BEST option is to not have ANY check at all; do an electronic funds transfer (EFT) bank-to-bank to your bank in Pakistan. If a properly-prepared Form w-8BEN is on file with the contractor, he/she will withhold NOTHING and no U.S. tax return will be required.