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G-5 Domestics and US Year End Income Tax Obligations

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Q. I am a G-4 visa holder and I sponsor a G-5 maid.  I do not pay US Income Taxes.  Am I required to file anything at year end?

Staff members of international organizations inside the US territory are not required to pay US Income Taxes on their income from the international organizations; however, when they become G-5 sponsors, they must file/pay employment taxes arising from their domestic (household) employment.  Federal employment taxes are reported and paid on the Form 1040 Schedule H.  If there is no income subject to US Income taxation, this Form must be submitted with payment as a stand along document to the Federal Government no later than April 15^th.

Q. I know my G-5 employee is required to file an Income Tax Return.  Do I have any responsibility?

G-5 domestic servants, admitted to the United States to work for staff members of international organizations and missions, must pay US income taxes on their wages. 

Having the privilege to be a G-5 sponsor brings along important obligations as well.  Beside the mandatory minimum wage, rules of conduct and other regulations, it is also a G-4 obligation to make sure the G-5 they sponsor properly files his/her income tax returns. 

Q. What documents does my employee need?

G-5 domestics must file their Income Tax Returns no later than April 15^th for the prior year.  To file their returns they must fill out Form 1040NR, Form 1040NR-EZ, Form 1040 or Form 1040EZ depended on their residency status for the tax year. 

IMPORTANT: Failure to properly report and pay US income taxes will cause the application for visa renewal or visa extension to be denied by the US State Department.

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More Information:   IRS Publication 519  IRS Publication 515

G-5 Domestics and US Income Taxation

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The US Treasury's Internal Revenue Service (IRS) advises that G and A visa holders temporarily present in the United States as a foreign government related individual are non-residents for income tax purposes, no matter how long they have resided in the United States. The situation for a G-5 domestic servant, who is NOT a foreign government related individual is a bit different, and their Federal income tax filing status is determined based on their time in the country.

The US Department of State in a Diplomatic Note dated March 27, 2012 advises:

Why is this important? G-5 and A-3 domestic servants, admitted to the United States to work for staff members of international organizations and missions, must pay US income taxes on their wages. The G-5 or A-3 domestic may be required to file and pay US income taxes using either Form 1040NR or Form 1040NR-EZ. Forms 1040 and 1040-EZ may not be considered proper filings unless the domestic meets the "substantial presence test." Failure to properly report and pay US income taxes will cause the application for visa renewal or visa extension to be denied by the US State Department.

G-4 and A-1 sponsors of the G-5/A-3 domestic servant is, under US law, a withholding agent when the sponsor pays to a domestic income subject to US income taxation. As a withholding agent, the sponsor is personally liable for any tax required to be withheld. This liability is independent of the tax liability of the foreign person to whom the payment is made. If the sponsor fails to withhold and the G-5/A-3 domestic fails to satisfy its U.S. tax liability, then both the sponsor and the foreign person are liable for tax, as well as interest and any applicable penalties. It is a best practice for the G-4 or A-1 sponsor of a domestic servant to withhold US income taxes from the G or A visa holder they employ.

As a general rule, withholding using a status of Single with zero exemptions will closely approximate the amount of US income taxes the non-resident will owe at year end. If the G-5/A-3 domestic qualifies under the "substantial presence test" as a US resident, the withholding calculation that best meets their tax obligations is Single with one exemption. Withholding calculations are approximate - actual tax due is calculated on the actual tax return.

More Information:
IRS Publication 519
IRS Publication 515

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G-5 Domestics: Arrived after July 1, 2010?

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G-5 domestics who are in the United States less than 183 days in their first year working in the US are considered non-resident aliens for Federal income tax purposes and will file a Form 1040NR for the first year of employment.

The IRS has established a new procedure for calculating the amount of income tax to withhold from the wages of G-5 domestics classified as nonresident aliens.  A new chart has been created that requires additional income to be added to wages for calculating the tax withholding amount only.  In addition, a new withholding table for nonresident aliens must be used in conjunction with the new tax withholding tables used to figure withholding tax on other employees.  The result of the new procedure is that withholding for nonresident alien G-5 domestics in 2010 is over 250% more than it was in 2009.  To learn more, review section 9 of IRS publication 15 (Circular E) Employer's Tax Guide for 2010.  You can download it from the IRS website using the following link: http://www.irs.gov/pub/irs-pdf/p15.pdf?portlet=3.

A G-5 domestic is a non-immigrant visa established to allow certain diplomatic personnel, including eligible staff of Non-Governmental Organizations (NGOs) such as the United Nations, World Bank, International Monetary Fund, etc., to have their family's domestic servants accompany them for postings within the United States. The G-5 domestic is subject to the same taxation as any other wage earner in the United States, and their sponsor (a G-4 visa holder) must report and pay all required Federal and state employment taxes.