AvMar Payroll Services Inc. has been retained by your employer to process crew payroll and ensure their compliance with US Payroll Tax Law. It is the non-resident crewmember’s responsibility to determine whether they have a tax filing responsibility in the United States and if they are unsure as to their tax responsibilities it is recommended they engage the services of an independent tax professional to provide guidance.
For payroll to be processed timely we require that all requested forms be completed in their entirety in a clear and legible manner. As you review your crew packet you will notice that there is a detailed description explaining the purpose of each form. If after reviewing the crew forms in their entirety you still have questions, please contact our office to discuss.
After reviewing the following please initial and date at the bottom of each page of this introduction letter and return with your crew packet to AvMar.
Please complete the attached forms:
1. Crew Information Sheet
2. Form W-4 Employee’s Withholding Allowance Certificate
3. Form 8233 Exemption from Withholding Based on Tax Treaty Benefits
4. Provide a copy of your Passport
Items 3 is only required if the crew member believes that they are exempt from withholding because they qualify for tax treaty benefits (please see attached explanation page regarding form 8233).
Frequently Asked Questions Crewmembers
Q. If I am working on a foreign flagged vessel for a foreign employer, how can I be liable for US tax?
A. The flag of the vessel and the jurisdiction of the foreign employer are irrelevant to determine where income is “sourced”. If your income is earned in the United States territorial waters, then that income is considered sourced in the U.S. for tax purposes.
Q. Why do some vessels withhold tax from my salary and other vessels do not?
A. We cannot speak for other vessels that you have worked on; however, this employer has been formed in a manner that requires tax to be withheld unless an exception applies.
Q. What is the exception?
A. Generally, taxes are not required to be withheld by the employer if the “Tax Treaty” exception applies. This exception allows the employer to not withhold taxes so long as you are a resident tax filer in your country of residency, and you are not present in the US territorial waters for more than 183 days over the course of a 365-day period. If a tax treaty exception is scrutinized by the Internal Revenue Service, the burden of proof is on the crewmember to provide supporting documentation that they are a tax resident of their home country in compliance of Article 4 of their respective tax treaty.
(Please note: not every country has a tax treaty with the United States and some countries have treaties that allow for shorter periods of time to be spent in the US. We must look at each crew member on an individual basis to determine their specific circumstances).
Q. What if I am present in the United States for more than 183 days during the year?
A. If you are traveling on a B1/B2 Visa your stay is considered temporary and you should avoid triggering the SPT “substantial presence test”. Typically stays exceeding 183 days will trigger the SPT and may result in the United States treating you as a “resident” for tax purposes. This basically means the IRS is considering you as living here, making your worldwide income subject to United States income tax. It is the crewmember’s responsibility to notify the employer if that crewmember has triggered the SPT. If you have questions regarding the SPT please call Tom Andrews, CPA, at 954-764-0404 to discuss in more detail.
Q. What happens if I realize after taxes are withheld that I qualified for a tax withholding exception?
A. Once tax is withheld and remitted to the IRS AvMar is unable to reverse that tax deposit and the crewmember’s only recourse will be to file a nonresident tax return after the year has ended. It is important that the crewmember coordinate with their employer so that the days present in the United States are reconciled prior to being provided to AvMar Payroll.
Q. What does AvMar do with the taxes withheld from my paycheck?
A. AvMar is required by law to transmit your taxes to the Internal Revenue Service every pay period.
Q. Will the tax withheld from my salary be refunded to me?
A. Probably not, the tax being withheld is the tax that would otherwise be due on your US source income. It should be noted that it is the nonresident crewmember’s responsibility to determine whether they have a tax filing responsibility in the United States. If the nonresident crewmember determines through their own independent tax advisor that they are exempt from US income tax or are due a refund, it is the nonresidents responsibility to lodge an income tax return with the Internal Revenue Service and request a refund.