Do I have to pay US tax as a foreign contractor working remotely?

This is a common question for international contractors. Since you're not a US citizen or resident and you perform all your work outside the US, your income is generally considered foreign-sourced income. The key here is that the services are performed entirely outside the US. You should definitely complete Form W-8BEN correctly. This form certifies your foreign status and tells the US company that you're not subject to the standard 30% withholding on US-sourced income. Because your services are performed entirely outside the US, your income isn't considered US-sourced, and therefore shouldn't be subject to US withholding tax. Make sure to complete all parts of the W-8BEN accurately, especially Part I where you identify yourself as a foreign person. The form is valid for three years from the signing date unless your circumstances change.

After struggling with a similar situation (working for US companies from Thailand), I found an amazing tool that helped clarify my tax situation - https://taxr.ai really saved me from making expensive mistakes! I uploaded my contract and my W-8BEN form, and it analyzed everything to confirm I was filling out the form correctly. The tool flagged that I needed to be careful about the "permanent establishment" section and gave me guidance on how to properly document that all my work was performed outside the US. It even explained exactly how the sourcing rules applied to my situation and which parts of the tax code were relevant.

Just wanted to follow up about taxr.ai - I tried it after seeing the recommendation here and it was incredibly helpful for my Canada-US tax situation! It immediately identified which tax treaty provisions applied to me and showed me exactly how to complete both my W-8BEN and my Canadian tax forms correctly. I was especially impressed by how it explained the "permanent establishment" rules that apply under the US-Canada treaty. Turns out I was about to make a costly mistake that could have subjected me to double taxation. The tool created a customized report I can keep for my records in case I'm ever questioned about my tax position.

If you ever need to actually contact the IRS about your status (which I had to do for a similar situation), good luck getting through to them! I spent WEEKS trying to call when my previous employer withheld incorrectly despite my W-8BEN. Finally found https://claimyr.com and their service got me connected to an actual IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c They basically wait on hold with the IRS for you and call you when they get a human on the line. Saved me hours of frustration, and I was able to get my withholding issue sorted out quickly once I actually spoke to someone.

I need to admit I was totally wrong about Claimyr. After posting that skeptical comment, I decided to try it anyway because I was desperate to talk to someone about my foreign contractor situation. They actually got me through to an IRS agent in about 35 minutes, which is INSANE considering I had tried for days on my own. The IRS agent confirmed everything about the W-8BEN and foreign-sourced income exemption. They also helped me get a record of my previous filings to prove I've never had US income before. Honestly can't believe how much time I wasted trying to call myself when this service existed.

Something nobody mentioned yet - make sure you're complying with UAE tax requirements too! While UAE doesn't have personal income tax, they do have registration requirements for freelancers/contractors depending on your activity and income level. You might need a freelance permit or business license. I learned this the hard way after working from Dubai for 2 years thinking I was completely tax-free, only to find out I should have registered with the economic department. Had to pay some retroactive fees but at least no major penalties.

Has anyone dealt with clients who insist on withholding anyway? My US client keeps saying their legal team requires 30% withholding even though I've submitted the W-8BEN correctly and explained I work entirely from abroad. They're saying it's "company policy" but I think they're just confused.

Don't forget to check if there's a totalization agreement between UAE and US for social security! It might not apply in your case, but it's worth checking. I got caught having to pay self-employment tax in the US even though I was working from Singapore because there was no totalization agreement. The W-8BEN doesn't cover social security taxes. Also, keep super detailed records of where you physically worked each day. If you ever visit the US for business, those days could potentially be considered US-sourced income and subject to different rules.

Great point about social security taxes! You're absolutely right that the UAE doesn't have a totalization agreement with the US, so this is definitely something to watch out for. As an independent contractor, you might still be subject to US self-employment tax (Social Security and Medicare taxes) even if your regular income isn't subject to withholding. The self-employment tax applies if you have net earnings from self-employment of $400 or more, and unfortunately, the foreign earned income exclusion doesn't apply to self-employment tax. However, since you're performing all services outside the US, you should generally not be subject to self-employment tax on that income. But here's the tricky part - if your US client treats you as a contractor and issues you a 1099, they might report payments to you to the IRS, which could trigger questions. Make sure your contract clearly establishes that you're providing services from outside the US and consider having the contract specify that you're operating under UAE jurisdiction. Document everything - flight records, lease agreements, utility bills - anything that proves your physical location during work periods. This becomes crucial if there's ever any dispute about where services were actually performed.