Tuesday, January 20, 2009

Tax Experts Defend Geithner's Failure to Pay Self Employment Tax from When He Worked for the Tax-Exempt IMF

A number of tax experts are defending Treasury Secretary designate, Timothy F. Geithner's failure to report and pay self-employment tax due from his work for the tax-exempt International Monetary Fund.  Here is an excerpt from the article:

American companies and their employees typically split payroll taxes for Social Security and Medicare: each pays 6.2 percent of the employee’s gross income to cover the Social Security piece, along with an additional 1.45 percent for Medicare.

But the I.M.F. is a tax-exempt organization. Its employees who are not American citizens do not owe these taxes. Still, I.M.F. employees who are American citizens must pay these taxes, just as if they were self-employed.

Self-employed individuals are responsible for paying all of the taxes on their own, and must file an additional form with their 1040 tax return when they do so. The I.M.F pays its employees a tax allowance every three months that covers the employer’s portion of the taxes, and routinely provides employees with a quarterly breakdown of that allowance.

For the entire story, see "Geithner’s Mistake on Tax Is Common, Experts Say" in the January 15, 2009, issue of the New York Times.

DAB

http://lawprofessors.typepad.com/nonprofit/2009/01/tax-experts-def.html

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