Nonresident alien commercial traveler exemption Q. Our company is hiring a nonresident alien to do some work for us on a temporary basis, no more than two months or so. I've been told that we may not have to withhold federal income taxes from the employee's wages. Is that so? What are the rules? A. Withholding is not required on small amounts of wages paid to nonresident aliens who are in the U.S. for a short period of time. These are the conditions that must be satisfied in order for this "commercial traveler" exemption to apply: * The nonresident alien employee is in the U.S. for no more than a total of 90 days during the taxable year * Compensation received for work performed in the U.S. totals no more than $3,000 during the taxable year * The nonresident alien is employed by a U.S. employer in a foreign country or a U.S. possession or by a foreign employer not engaged in a trade or business in the U.S. If the nonresident alien does not qualify for the commercial traveler exception, your company must withhold federal income tax from the wages paid for services performed in the U.S. This may require an allocation where wages are paid for work performed inside and outside the U.S. See The Payroll Source®, § 14.2-3 for more details. 99 Payroll for U.S. Employees Abroad and Aliens in the U.S. 14 APA's Top Payroll Questions & Answers for 2019https://bookshelf.americanpayroll.org/payroll_source/