Thread regarding Wells Fargo & Co. layoffs

Why outsouring? The bank doesnt just save on salary expenses....

https://www.linkedin.com/pulse/us-companies-can-legally-hire-foreigners-living-other-rich-mba

As a general rule, wages earned by nonresident aliens for services performed outside of the United States for any employer are foreign source income and therefore are not subject to reporting and withholding of U.S. federal income tax.

"Non Residents"

“As a general rule, wages earned by nonresident aliens for services performed outside of the United States for any employer are foreign source income and therefore are not subject to reporting and withholding of U.S. federal income tax.”

This means that U.S. companies who hire foreigners living outside of the U.S. are not required to withhold the employee’s estimated taxes and do not have to report these wages to the IRS.

No W-2 or 1099 IRS forms!

“Question: If I am a Non-U.S. citizen but working for a U.S. company from my home abroad, do I have to pay U.S. taxes?

Answer: If your only income from the U.S. company is from compensation for services performed for that company, and you performed no services for the company while physically present in the U.S., you will not be subject to U.S. taxes on that income."

Also see IRS Publication 519, U.S. Tax Guide for Aliens.

It makes sense that the U.S. government is only concerned about protecting U.S. citizens in the job market from foreigners who will come to the U.S. to take their jobs.

However, nowhere in the U.S. Department of Labor’s rules and regulations do they state that it is illegal for U.S. companies to hire foreigners living in other countries who will remain in their countries.

No Social Security or Medicare Deductions
The IRS also states that foreigners who work for a U.S. company outside of the U.S. will not be subject to Social Security or Medicare deductions.

Here's what the IRS website says:

“In general, U.S. social security and Medicare taxes apply to payments of wages for services performed as an employee in the United States, regardless of the citizenship or residence of either the employee or the employer.”

Note: The words "in the United States" means the employee must be inside the U.S.

Therefore: No Social Security Tax or Medicare contributions by the employer or deductions from the foreign employee’s wages.

The Benefits of Hiring Freelance Foreigners Working in Other Countries include:

• The U.S. company saves time and money by not having to withhold estimated taxes, social security taxes, and Medicare from the employee’s salary.

• The U.S. employer saves money by not having to pay the Federal Insurance Contributions Act (FICA) contributions. These include U.S. Social Security Taxes (6.2%) and Medicare (1.45%). That’s a savings of 7.65% for the U.S. employer according to the current rates.

• The employer does not have to file reports with the IRS or Labor Department.

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| 1508 views | | 10 replies (last May 15, 2021) | Reply
Post ID: @OP+1aP905Bi

10 replies (most recent on top)

@nrk+1aP905Bi

I tend to disagree.

I’ve got 35 years in banking and it was not that the work force collectively decided that changing employers every 2 years was a good idea. What happened was mergers and the death of a thousand cuts to pensions, severance, healthcare, 401K matches, and then for the past 20 years offshoring of jobs. Loyalty is a two way street which is gone once fractured.

It is true that highly compensated senior managers do routinely jump after 2 years in place for huge contracts, and we all know the list of banks and the patterns. But the bulk of the employees are focused on raising their families and really only move rarely.

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Post ID: @2azx+1aP905Bi

Yes. But I suspect that the governments of the countries where they are working (India and Phllippines) likely require witholding of tax and their own versions of social security.

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Post ID: @2rew+1aP905Bi

There's tax benefits to using domestic contractors as well. All else being equal, internal employees are the most expensive kind you'll ever have. In the good old days most employers thought it was worth it because there are loyalty benefits etc to having internal people. Then the work force collectively decided that changing employers every 2 years was a good idea (for a whole host of unrelated reasons), so it's not surprising that employers think it's less of a benefit these days. If you contract every possible task, you really don't care about loyalty or turnover anymore. At that point the only question is "what can we contract?"

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Post ID: @nrk+1aP905Bi

Child, it’s never too late to get a real education and here’s a little secret… get a good one and cheap by getting a 4 year degree in flyover country. You know, where all of the key players in tech got theirs…

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Post ID: @fjl+1aP905Bi

From your rhetoric, we know who has been voting against their self interests. Your need a new shtick by the way just like the talking heads you love . That horse was dead long ago.

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Post ID: @rwe+1aP905Bi

This loophole should have been closed long ago but we know those congressmen and women are getting bribes, er, campaign contributions to keep it from happening.

Same with the H1B visa program, which has gone far beyond its original purpose, which was an emergency supplement to existing jobs, not meant to replace them with foreigners.

Anyone who supports this is a traitor to their people (that would be Americans of all races, colors, and creeds). Period.

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Post ID: @ujz+1aP905Bi

I still havent received mine for last year from wells fargo ! They will have to pay for my extenstion!

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Post ID: @tsh+1aP905Bi

Whats awesome about tax law is that it can be changed.

This looohole can be easily closed either with an executive order or reconciliation.

Call your congressperson and tell them whats going on.

Lets get this loophole closed.

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Post ID: @sfy+1aP905Bi

Subsidiaries, located outside the US have to pay taxes according to state and local rules. I think India has its own social security, corp tax, employee tax...etc:

https://shieldgeo.com/payroll-tax-india/

The real savings comes from the cheap labor and relaxed labor rules.

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Post ID: @bhb+1aP905Bi

Welcome to economics 101 OP. You're very very late. Have a seat and try not to disturb any of the others.

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Post ID: @vsn+1aP905Bi

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