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Tax Withholding Requirements for Foreign Guest Artists

When bringing a foreign artists to the US, the petitioning entertainment companies (sponsors) should consider the US Tax law. The requirements apply to P-1, P-2 and P-3 visas entertainers.

To comply with all the regulations, sponsor must withhold 30% of the artist’s GROSS compensation (includes all expenses and cash reimburses).

Then the sponsor files Form 1042 that must be filed regardless of whether any tax was withheld on payments to foreign artists. This form summarizes the total amount of income paid to foreign artists, as well as all tax withheld, in the aggregate. 1042 should be filed by March 15 of the year following the calendar year in which the payments were made.

Form 1042-S is issued to a foreign artist by a sponsor. This form is similar in purposeto Forms W-2 and 1099 and serves to replace such forms for the reporting of most income paid to foreign artists (i.e., if the foreign artist is an independent contractor, the income paid to the performer should be reported on Form 1042-S.) A separate Form 1042-S must be filed for each foreign artist to whom or on behalf of whom a sponsor makes payments. A foreign artist’s taxpayer identification number (have to get SSN and if denied apply for Taxpayer ID number) is required on Form 1042-S if the artist either seeks credit for the taxes withheld or a tax treaty tax exemption. By March 15 of the year following the calendar year in which the payments were made, the presenter must give the foreign artist copies B through D of Form 1042-S, and file Copy A with Form 1042.

The foreign artist then files 1040NR and claims the deduction of all the expenses.

If an artist is tax-exempt in his country, the artist can present a letter from attorney stating that the artist would be tax-exempt in the US.

There could be different ramifications if sponsoring company does not comply with the US Tax regulations. Not paying US taxes may result in difficulties obtaining P1 visas, P2 visas and P3 visas in the future.

ilexlaw provides full range of legal services related to bringing foreign artists to perform in the US. The experienced P3 visa attorneys at Ilex Law can help you in getting hassle free approval on P1, P2 and P3 visas.

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