again, more info. After two months of talking to people at Dyncore and subsidiary here is where it is at. My client worked for them in Dubia from May 8, 2006 to May 12, 2007 and is on extention, for income taxes. He received nothing from the company in the form of W-2 and/or 1099. My problem, and maybe I am wrong, is does he still have to pay self employment taxes-nothing was withheld. Everyone who has talked to him says no. Everyone I have talked to either say they have never heard of that or they do not know (everyone is at the company). My client did have a residency card while he was there and did not know why. Is there some exception where you use the foreign income exclusion on these payments and there is an exemption from self employment taxes. I now will talk to Dyncore Account Super to get another explanation on friday..??
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foreign earned income
A TP can take a foreign earned income exclusion for regular federal income tax purposes; however, if he was paid with a 1099-MISC, then he still owes SET. Confer IRC section 1402. and 911.Originally posted by JON View Post -
What I would do
The IRS presumption is everyone is an employee unless they prove otherwise. So in this type of situation where there is no 1099 MISC I would treat the taxpayer as an employee who had no taxes removed from his pay. If the paying entity is a foreign company then this makes sense. If the paying agent was a US company then it does not make sense but I would argue the company screwed up.Comment
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Talked to the boss
This was set up on purpose in this fashion. They are employed by a FOREIGN corporation, which excludes it from social security or SE taxation. It is set up in Dubia(sp) so as to make sure there are no taxes by the foreign country. Evidently some countries do not require W-2s, etc.Comment
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