Notes

Compensation
personal service income is determined by location service is performed
-on time basis except fringe bnft
case by case non employee using facts


A U.S. citizen is subject to worldwide taxation on income from all sources. However, a foreign person is subject to U.S. tax only on their income from sources within the U.S., with minor exceptions.


A dividend from a foreign corporation may be U.S. source income, if at least 50 percent of the corporation’s gross income for the preceding three years was effectively connected income (ECI).


The general rule for sourcing wages and personal services income is controlled by where the service is performed. The residence of the recipient of the service, the place of contracting, and the time and place of payment are irrelevant.

If services are performed both in and out of the U.S., the compensation for the services is allocated on a basis that most correctly reflects the proper source of income under the facts and circumstances. In many cases, it may be that an apportionment on a time basis may be acceptable.



An amount included in your income is taxable unless it is specifically exempted by law. Income that is taxable must be reported on your return and is subject to tax, unless it is not taxable. Income that is non-taxable may have to be shown on your tax return.


Gross income includes everything you receive in payment for personal services.
Certain types of employees fall under 'special' rules. Employee types include: members of clergy or religious orders, people working for foreign employers, military personnel, and volunteer.
Business and investment income includes rents, royalties, partnership income, and S corporation income.
Income received for personal injury or sickness must be reported.
You may have taxable income from certain transactions even if no money changes hands.






An amount included in your income is taxable unless it is specifically exempted by law. Income that is taxable must be reported on your return and is subject to tax. Income that is nontaxable may have to be shown on your tax return.


There are special rules for people in certain types of employment such as members of the clergy, members of religious orders, people working for foreign employers, military personnel, and volunteers.


A partnership generally isn't a taxable entity. The income, gains, losses, deductions, and credits of a partnership are passed through to the partners based on each partner's distributive share of these items.