APA APA Global Payroll & International Compliance

Question 1

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?

Accepted Answer

No US federal income tax withholding is generally required

Answer

Full US federal withholding applies

Answer

Only state tax withholding applies

Answer

FICA taxes still apply in full

Question 2

What is a totalization agreement between the US and another country designed to prevent?

Accepted Answer

Dual social security/social insurance tax obligations for internationally mobile employees

Answer

Double payment of income taxes

Answer

Currency exchange losses on payroll

Answer

Duplicate W-2 filings

Question 3

Which IRS form is used by a US employer to report wages paid to non-resident alien employees subject to withholding?

Accepted Answer

1042-S

Answer

W-2

Answer

1099-NEC

Answer

941

Question 4

When calculating a hypothetical tax (hypo-tax) for an expatriate employee, what is the primary goal?

Accepted Answer

To make the expat no better or worse off tax-wise than if they had stayed home

Answer

To ensure the expat pays no taxes abroad

Answer

To maximize the expat's take-home pay

Answer

To calculate state income tax only

Question 5

What does the term 'shadow payroll' mean in global payroll management?

Accepted Answer

A payroll run in the host country for compliance purposes while the employee is still paid via home country payroll

Answer

A payroll processed in secret

Answer

A duplicate payroll for auditing

Answer

An automated payroll system

Question 6

Which document does a US employee working abroad typically need to claim the Foreign Earned Income Exclusion (FEIE)?

Accepted Answer

Form 2555

Answer

Form W-4

Answer

Form 1042

Answer

Form 8233