Question

Marie is a resident of Belgium. For the year, a US company paid her for 200 days of work, ---140 in Belgium and 60 in the US. How is her US-source income computed?

A) All of her income for the year is US-source income.

B) Her US-source income cannot be determined.

C) Her US-source income is her total compensation for the year, multiplied by 60/200

D) Her US-source income is her total compensation for the year, multiplied by 60/365 (or 366 if the tax year is a leap year).

Answer 1

C) Her US-source income is her total compensation for the year, multiplied by 60/200

Reason: All wages and any other compensation for services performed in the United States are generally considered to be from sources in the United States. The place, where the personal services are performed, generally determines the source of the personal service income, regardless of where the contract was made, or the place of payment, or the residence of the payer.

If the income is for personal services performed partly in the United States and partly outside the United States, you must make an accurate allocation of income for services performed in the United States.

That is, U.S. source income is the amount that results from multiplying the total amount of pay by the fraction of days in which services were performed in the U.S. This fraction is determined by dividing the number of days services are performed in the United States by the total number of days of service for which the compensation is paid.