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G4 Visa Taxes in the U.S.
When you are moving to another country for a period of time as an official or employee of an international organization, it can feel like a new world of challenges awaits. Especially if you have to wonder and worry about your taxes. Are you liable for income tax in the US? If you own property is estate tax or capital gains tax applicable? Do G4 visa taxes even exist?
Let’s take a look at how your G4 visa taxes will work on your official trip to the US.
What is a G4 Visa?
The G4 visa is a nonimmigrant visa that is granted to officials or employees of international organizations whilst they are based in the US for official business. It is essentially a diplomatic visa that allows a person to enter the US for a short period of time. The G4 Visa makes it possible for officials or employees to engage with their official activities in other countries. If you are in the US on a G4 visa you can only perform duties related to the international organization you are in the US for. You can not use your entry for business or personal purposes.
The G4 visa is typically given to employees of organizations such as the United Nations. Family members and staff of the principal G4 visa holder will also be allowed to enter the US on a G4 visa.
Are there G4 Visa Taxes in the U.S.?
Tax liability in the US can be a complicated issue. Especially if you aren’t a citizen or permanent resident of the US.
Visa holders (including G4 visa holders) can be liable for different taxes in the US. Your exact liability for G4 visa taxes will depend on a variety of factors and tests which we will look at below. We will also include links to reputable resources if you need more information on a specific topic you would like to better understand.
Substantial Presence Test
A visa holder’s tax liability in the US is usually determined by applying the substantial presence test. The substantial presence test provides that visa holders are residents for income tax purposes if they’ve been in the US for 183 days or more in a tax year. There is also a three year rolling period for calculating the days in any given year.
G4 visa holders are, however, exempt from the substantial presence test. The tax liability for income tax is determined by applying other factors we’ll explore below.
G4 visa holders who are employees of an international organization and who received compensation (income) for their official services in the US are not liable for income tax in the US. This would include income in the form of wages, fees or a salary according to the contract you have with your employer.
If a G4 visa holder received any income from a source other than their “official duties” (so outside the scope of their employment by the international organization), however, this income would be subject to US income tax. In this instance, the substantial presence test would still not be applicable for income tax purposes. So G4 visa holders will only be taxed on this income if it actually comes from a source in the US. If you earn income from a source from outside the US, other tax laws will apply.
Estate tax is a levy imposed on estates where the value exceeds the limit set by law. G4 visa holders are not exempt from estate tax. Liability for estate tax is determined by whether you are domiciled in the US. Domicile is determined by various factors of which G4 visa status is one. But not all G4 visa holders will automatically be regarded as domiciled in the US.
If you are regarded as being domiciled in the US, you will be subject to estate tax on your worldwide assets. G4 visa holders who are not regarded as being domiciled in the US will only be subject to estate tax on assets that are based in the US.
Estate tax ranges between 18% and 40%. For US domiciliaries, a credit equivalent to $11,400,000 of value in 2019 is available. For G4 visa holders who were not domiciled in the US an exemption of $60,000 is available against the value of your assets.
G4 visa holders are not exempt from gift tax either and, as with estate tax, your domicile will determine your liability for gift tax. The gift tax is a federal tax imposed on an individual who gives anything of value to another person. This is specifically if the receiver of that item does not pay full value for that item. The giver of that item (where the item is then regarded as a gift) will be taxed.
As a G4 visa holder, you will only be subject to US gift tax on tangible personal property that is located in the US. The Gift tax, as with estate tax, ranges between 18% and 40%. For 2019 and 2020 the annual gift exclusion is $15,000 per recipient.
Capital Gains Tax
The residency test that is applied to determine liability for capital gains tax is similar to the substantial presence test, but it operates slightly differently. G4 visa holders will be subject to a 30% tax on capital gains from a US source if they were in the US for 183 days or more in a tax year.
If this is true for you, you will be regarded as a resident for capital gains tax and will be taxed 30% on all your capital gains. If you were not in the US for a period of 183 days or more, you will be regarded as a nonresident for capital gains tax purposes. In this case, you will not be subject to US tax on capital gains unless it is a capital gain on the sale of real property which is located in the US.
So what if you don’t work for an international organization but for a foreign government?Wages for Employees of Foreign Governments
If you are an employee of a foreign government and you earn wages whilst in the US, that income isn’t subject to income tax in the US. Examples of such employees include being an ambassador, diplomatic or consular officer. This is an exception that will apply regardless of your citizenship or residency.
If you performed services for the US or Puerto Rican corporation that is owned by a foreign government, your compensation for those services will generally be subject to US income tax though.
For more details on this exemption, take a look at the Internal Revenue Service website here. This will give you a more comprehensive understanding of the details applicable to the above exemption.
- Why Was No Federal Income Tax Withheld From My Paycheck?
- Why Do I Owe Taxes?
- Why Do I Owe State Taxes?
- Are You Exempt from Federal Withholding?
- How to File Taxes With No Income
- Can You File Taxes Without a W2?
- H1B Taxes: Everything You Need to Know
G4 visa taxes don’t have to stress you out. Simply consider the information we provided above and see whether you might be liable for income, gift, estate or capital gains G4 visa taxes. It is important to make sure you know when you are liable so that you can comply with all the federal tax laws and requirements while you are on your trip to the US.