10 Staff members with duty station in the United States of America who either are United States citizens or green card holders and have signed I-508 Waiver of Rights, Privileges, Exemptions and Immunities, must file a federal income tax return by 15 April each year. Those staff members with duty station outside the United States must file by 15 April and may be allowed an automatic 2-month extension of time to file by including a statement to this effect with their tax return. An income tax return must be filed regardless of whether WHO income is earned within the United States or not and whether tax liability is zero after foreign earned income and housing exclusions set forth in United States Tax Code Section 911.
20 GSC/Payroll is responsible for reporting staff members earnings paid through GSM system to United Nations Income Tax Unit (UNIT). Staff members who are subject to United States income tax will be issued a statement of taxable earnings annually by UNIT via email on or before 31 January. Information appearing on this form is reported to the United States Internal Revenue Service (IRS) by UNIT.
30 WHO earnings for federal income tax reporting purposes should also include any reimbursement received from the Organization during the tax year in respect of state income taxes (see State Income Tax).
40 If the total WHO earnings exceed both the foreign earned income and housing costs exclusions to the extent allowable (United States Tax Code Section 911) the earnings must be "grossed-up". The grossed-up calculation takes into account personal exemptions, filing status, foreign housing cost and standard or itemized deduction whichever is higher. GSC/Payroll will send a memo to qualifying staff to request the above information which will be used in the gross-up calculation. The formula calculating gross-up is provided in III.20 Annex 18.C.
50 For staff members who are assigned to places outside the United States, it may not be possible, through limited presence abroad, to qualify either wholly or in part for the foreign earned income and housing costs exclusions in a tax year. In such cases the "grossing-up" formula is applied either to the total net WHO income or to that part which cannot be excluded for United States tax purposes.
60 Provided that their terms of appointment entitle them to reimbursement of federal income tax (see Section III.18.1, Income Tax : policy and application), staff members who are United States citizens or who hold United States resident alien status and who have signed the Waiver of Rights, Privileges and Immunities (see Section III.18.1, Income Tax : policy and application), and provided proof thereof to WHO, are entitled to income tax reimbursement computed in accordance with Section III.18.1, Income Tax : policy and application, taking into account the exclusions for foreign source earned income and foreign housing costs available to qualifying taxpayers under the Tax Reform Act of 1986 (see III.20 Annex 18.B). Staff members who qualify under this paragraph are required to provide their social security numbers to the Organization in order to receive an advance as provided in III.18.2 Claims for reimbursement of income tax, Income Tax Advances or to be reimbursed. Staff members who are subject to United States income taxes in the United States are reminded that they are required by the United States Internal Revenue Service to provide their social security number. Any penalty imposed for failure to provide this number will be the sole responsibility of the staff member concerned.
70 Federal income tax returns must be prepared using United States Treasury Department Form 1040 (United States Individual Income Tax Return), and other forms such as form 2555 (foreign earned income exclusion). A staff member may file form 2350 (Application for extension of time to file United States Income Tax return) to allow time to qualify for foreign earned income exclusion. Requests for refund of tax should be made on IRS form 1040 or form 1040X (if amended tax return). Forms and publications may be obtained from any United States Embassy, Legation or Consulate, or directly from the IRS at https://www.irs.gov/forms-pubs/about-form-1040. In the United States, IRS forms are available at post offices, libraries and some banks.
State Income Tax
80 The Organization reimburses United States state income tax on the same basis as federal income tax. The requirements for filing state returns vary from state to state. It is the responsibility of staff members to obtain all information on their personal liability for state income tax, to file returns and to comply with the relevant laws and regulations. Copy of state returns, with the relevant state instruction and publication, should be mailed (together with a copy of the federal tax return) to UNIT, where reimbursement is determined. It should be noted that WHO reimbursement of state income tax is reportable as WHO earnings for federal income tax purposes in the year of payment.
Social Security Taxes
90 Staff members who are United States citizens employed in the United States or certain United States territories are required to pay Social Security taxes at the self-employed rate. Staff member’s WHO earnings that are earned outside United States aren’t subject to self-employment tax. However, any WHO income that’s earned by a staff member while in the United States on duty (not on leave) is subject to self-employment tax. The organization reimburses 50% or half of self-employment tax while the staff member is responsible for the other half. Staff members must use schedule SE to report self-employment tax to the IRS. To claim a reimbursement for self-employment tax, staff members must include a copy of the IRS schedule SE with their claim forms.
Minimizing of income tax liability
100 Staff members are required to take all available measures to minimize their tax liability by itemizing deductions, filing joint returns, or taking such other action as is necessary to this end. If the staff member has not taken the opportunities provided by law to minimize the taxes, the Organization reserves the right either to withhold reimbursement pending clarification of the method used in preparing the income tax return, or make the reimbursement on the basis on which the tax return should have been filed.
110 Joint returns for federal income tax normally result in lower tax liability. Although the decision to file joint or separate returns rests with the staff member, the Organization reserves the right to compute its liability on the basis of the lesser reimbursement level. If separate returns have been filed, copies of the spouse's return as well as that for the staff member may be required in order to determine the tax reimbursement due. Extenuating circumstances may preclude the staff member from filing a joint return or obtaining a copy of the spouse's return. These circumstances should be conveyed to UNIT. A mutually acceptable determination as to the proper filing status will then be sought.
120 For income tax advances, the Organization will make payments directly to the United States IRS using the Electronic Federal Tax Payment System (EFTPS). Staff will be notified of amounts paid on their behalf via email by UNIT. Staff who can’t enroll in the EFTPS program will be issued with a cheque drawn payable to IRS. For state income tax advance, the organization will make payments directly to New York but will issue cheques payable to staff members for Maryland, Virginia and Washington D.C. The organization will not issue cheques for states other than the above states. Instead, the organization will reimburse staff members when they file for a claim and any penalty or interest that may be assessed as a result of nonpayment of quarterly advance tax for these states.
Reimbursement after separation from WHO service
130 Reimbursement of income tax due to staff who have separated from WHO service is computed on the basis of the former staff member's income tax return for the separation year, a copy of which must be submitted for this purpose. If separation benefits are paid only in the year after that of termination, the Organization requires a copy of the income tax return for the latter year before a final tax reimbursement can be determined and paid.
