Treaty Traders (E-1 Visa): Key employees and principal owners of a U.S. company that is at least 50% owned by nationals of their country of citizenship may work for the company in the U.S. if their country is signatory to a trade treaty with the U.S., and more than 50% of the company’s trade is with the U.S.
Treaty Investors (E-2 Visa): Key employees and principal owners of a U.S. company that is at least 50% owned by nationals of their country of citizenship may work for the company in the U.S. if their country is signatory to an investor treaty with the U.S., a significant cash investment has been made in the company, and the company is actively engaged in trade or the rendering of services.
About spouses and work:
Both E categories have a twp year period of initial admission, with an unlimited number of two year extensions. ( As of 1/16/02, E spouses can work)
The L category ordinarily has a one year period of initial admission, with extensions up to a total of 7 years. (As of 1/16/02, L spouses can work)
The H has an initial period of between one and three years, with extensions up to a total 6 years. (H spouses cannot work).
Taxes:
Compensation for employment services performed in the U.S. are wages subject to federal income tax withholding, and Social Security and Medicare tax withholding. U.S. employment taxes apply even if the employee’s compensation is paid on a foreign payroll.
Under the U.S. tax Code, all non immigrants, such those who hold temporary visas as investors, professionals, and international executives, are considered “resident aliens” if they have been physically present in the U.S. for 183 days or more during the year. If such is not the case, the individual is a “nonresident” for tax purposes.
The U.S. is one of the few nations that taxes its citizens on their worldwide income. The U.S. imposes the same system on resident aliens. They are taxed on their worldwide income, whether or not remitted to the U.S., and regardless of geographical source.
The foreign tax credit system affords relief from the taxation. Under this system, the resident alien can credit his foreign income taxes against his U.S. income taxes.
A nonresident alien usually is subject to U.S. income tax only on U.S. source income.
Some of the rules that apply to U.K. subjects are summarized below:
INCOME EXEMPT FROM TAXES UNDER U.S. / U.K. TAX TREATIES AND AGREEMENTS a. Pay for certain personal services performed in the United States. Income that residents of the United Kingdom receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States during the tax year is exempt from U.S. tax if the residents:
1. Are in the United States for no more than 183 days during the tax year, and 2. Do not have a fixed base regularly available in the United States.
Income that residents of the United Kingdom receive for labor or personal services performed in the United States as employees (dependent personal services) is exempt from U.S. tax if the employees meet three requirements.
1. They are in the United States for no more than 183 days. 2. Their income is paid by or on behalf of an employer who is not a resident of the United States. 3. Their income is not borne by a permanent establishment or a fixed base that the employer has in the United States. Income for services performed by an employee and member of the regular complement of a ship or aircraft operated in international traffic is taxed by the country of which the employer operating the ship or aircraft is a resident.
These exemptions do not apply to income received for services performed in the United States as an entertainer, musician, or athlete if the income, including reimbursed expenses, is more than $15,000 in any tax year.
b. Pay of a professor, teacher, or researcher who teaches or performs research in the United States for a limited time.
A professor or teacher who is a resident of the United Kingdom on the date of arrival in the United States and who is in the United States for not longer than 2 years primarily to teach or engage in research at a university, college, or other recognized educational institution is exempt from U.S. income tax on income for the teaching or research. If the individual 2-year period is exceeded, the exemption is lost for the entire visit, including the 2-year period.
The exemption does not apply to income from research carried on mainly for the private benefit of any person rather than in the public interest.
c. Amounts received for maintenance and studies by a foreign student or apprentice who is here for study or experience. A student or business apprentice who is a resident of the United Kingdom at the time of arrival in the United States and who is receiving full-time education or training in the United States is exempt from U.S. income tax on payments received from abroad for maintenance, education, or training.
d. Wages, salaries, and pensions paid by a foreign government. Income, other than a pension, paid by the United Kingdom to employees for services performed for the United Kingdom is exempt from U.S. income tax. The exemption does not extend to employees of a political subdivision or local authority of the United Kingdom. The exemption does not apply if the services are performed in the United States and the recipient is both a citizen and a resident of the United States.
Pensions paid by the United Kingdom or its political subdivisions or local authorities to individuals for services performed in the discharge of governmental functions are exempt from U.S. income tax, unless the recipient is both a citizen and a resident of the United States.
These exemptions do not apply to payments or pensions for services performed in connection with a business carried on by or on behalf of the United Kingdom.
There are additional possible tax exemptions. For example, if a U.K. employer sends an employee to work in the U.S. for five years or less, he or she will remain covered by the U.K. social security system, and be exempt from Social Security taxes in the U.S. If an individual is self-employed and resides in the U.S. or the U.K., he or she will generally be covered and taxed only by the country of residence.
NON-WAGE INCOME
Whether or not the various types of non-wage income from U.S. sources is exempt from U.S. taxation, such as interest on deposits at U.S. banks, or gains from the sale of capital assets will depend the length of the U.K. subject’s physical presence in the U.S. during the year in question, the connection of the income with any business activity that may be carried on in the U.S., and the particular provisions of the Treaties between the U.S. and U.K. that apply to each situation.
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