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Question for the Money Doctors

Question submitted on Jul 26, 2012.

Question

I am a Taiwanese. Recently I got hired by an american university operating in China. I have a U.S. bank account in California. If I apply for direct deposit of my salaries to my American bank account, do I have to pay income taxes? Thank you.

Answer

Generally, US income tax does not apply to personal services performed by a nonresident alien outside of the US.  The location of the bank into which you have your salary deposited (or whether you have your salary deposited at all) does not determine whether it will be subject to income tax in the US.  Having a US bank account can subject you to 30% withholding on any interest which you earn on that account.  This may not be a significant problem for you if you are not planning to leave a balance in the account for long enough for interest to accrue.  Much more information on this subject can be found in IRS Publication 515 which is available at


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