Situation:

• I am a German citizen working and living in the U.S. on a G4 non-resident visa (work for United Nations). As such, I am exempt from U.S. income tax related to my work at the UN.
• In addition to my part-time work in the U.S. for the UN, I work as a consultant for other agencies and companies based outside the U.S (this work is performed outside the U.S. as well).
• I am married to a U.S. citizen.

Questions:

1. In which country does my income from non-U.S. employers have to be taxed? In my home country Germany or in the U.S.? I understand that my income from German employers is taxed in Germany, but that other foreign income may have to be declared in the U.S. given that this is where I am based most of the year.
2. Provided that I would have to declare my non-U.S. income in the U.S., how do I determine the tax rate on the income from foreign sources? Is it automatically 30% because of my non-resident status or is there a possibility to avoid the flat rate?
3. I understand my G4 visa status restricts me from other salaried work in the U.S. that is not related to the United Nations. Thus, am I allowed to have a contract for a U.S. based employer for work performed outside the U.S. (i.e. home-based assignment outside the U.S.)? If yes, when filing a W-8Ben, do tax treaty benefits apply given that there is a tax treaty between the U.S. and Germany? In other words, can I be exempt of the 30% automatic tax withholding and under what conditions?

Thanks in advance!

As a holder of the G-4 visa, you are considered to be a non-resident alien and your income from the United Nations is tax-exempt. As a non-resident alien, the only income the United States can tax is income that is sourced to the United States, meaning the income comes from a U.S. company.

Given that the income is sourced from outside of the United States, the U.S. government has, in my opinion, no legal standing to tax such income. Germany MAY have such standing, but I would have to know from which other countries the foreign income was sourced and would have to research any tax treaties between Germany and the other foreign country. I recommend that you contact a Germany-based international tax consultant on this phase of the question.

If you contract for work with a U.S.-based company, you would have to PROVE that the work is being done outside of thew United States. Such proof would have to come from the U.S.-based company AND the Form W-8BEN would have to stipulate that fact to keep the U.S.-based company from establishing a paper trail for the income with a Form 1099-MISC. Even with such documentation, given the fact that, by your own admission, you spend MOST of your time in the U.S. I believe you would have a hard time convincing both the IRS and the State Department that you were in fact performing the work overseas and not violating your G-4 visa.

Yours is a complex international tax case, involving tax laws in both the United States and Germany plus whatever foreign countries originating your contract work. That being the case, you should NOT be trying to seek legal tax help from a public forum.

You need to contact a international tax law firm.