APA Global Payroll & International Compliance Flashcards
6 cards from real APA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 APA Global Payroll & International Compliance flashcards as text
When a US company pays a non-resident alien employee for services performed entirely outside the US, what is generally true about US federal income tax withholding?
Answer: No US federal income tax withholding is generally required
Wages paid to a non-resident alien for services performed entirely outside the US are generally not subject to US federal income tax withholding.
What is a totalization agreement between the US and another country designed to prevent?
Answer: Dual social security/social insurance tax obligations for internationally mobile employees
Totalization agreements prevent employees from paying social security taxes to both the US and a foreign country simultaneously for the same work.
Which IRS form is used by a US employer to report wages paid to non-resident alien employees subject to withholding?
Answer: 1042-S
Form 1042-S is used to report US-source income paid to foreign persons, including wages subject to NRA withholding tax.
When calculating a hypothetical tax (hypo-tax) for an expatriate employee, what is the primary goal?
Answer: To make the expat no better or worse off tax-wise than if they had stayed home
Hypothetical tax equalizes the expatriate's tax burden so they pay approximately what they would have paid at home, with the employer absorbing additional foreign taxes.
What does the term 'shadow payroll' mean in global payroll management?
Answer: A payroll run in the host country for compliance purposes while the employee is still paid via home country payroll
Shadow payroll is maintained in the host country to meet local tax withholding and social security compliance obligations without actually paying the employee through that payroll.
Which document does a US employee working abroad typically need to claim the Foreign Earned Income Exclusion (FEIE)?
Answer: Form 2555
Form 2555 is filed with the US tax return to claim the Foreign Earned Income Exclusion, allowing qualifying US citizens abroad to exclude a portion of foreign-earned income.