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International Tax Blog - New and Interesting International Tax Issues


New IRS Practice Unit - NRA Deferred Compensation

2022-04-02

Yesterday the IRS published a new practice unit titled “Deferred Compensation Received by Nonresident Alien Individuals.”

The practice unit discusses payments to NRAs from four types of deferred compensation plans:

  1. Salary deferral – unfunded deferred compensation plans under which U.S. taxation is deferred until payment is made.
  2. Distributions from a tax-qualified retirement plan (usually a pension or profit-sharing plan) of a U.S. company.
  3. Payments made by a U.S. company under an unfunded “top hat” retirement plan for key employees.
  4. Income arising under an equity-based compensation plan (employee stock option plan or restricted stock plan).

Generally, the practice unit only applies to deferred compensation received by NRAs who were treated as employees, and not as independent contractors, during the period in which the deferred compensation was earned.

This new practice unit has been added to our Practice Units By Topic page.

Tags: 861 Source of Income, 864 Engaged in U.S. Trade or Business (ETOB), Other - IRS Practice Units