How do governments assess and collect taxes on the income of non-residents?

When a person earns money from activities taking place within a country, that country often has the right to collect taxes related to the income. This is true even if the person is not a resident of the country. Governments typically assess and collect taxes on the income of non-residents through a process known as withholding. The primary way that governments assess and collect taxes on the incomes of non-residents is by requiring that the employer withholds a certain amount in taxes when the payments are made to the non-resident. For example, in California, employers who make payments to non-residents are required to withhold 7% of that payment for state income taxes. Additionally, employers may be required to withhold an additional 4.2% of each non-resident payment for local taxes. Employers should also ensure that they withhold any applicable federal income taxes. At the end of the fiscal year, the withholding tax is usually paid over to the government. The government will then use this withholding tax to compensate for any taxes due from the non-resident. The remaining amount is then refunded to the non-resident taxpayer. In some cases, the non-resident taxpayer may be required to file a tax return and pay additional taxes based on their income. Overall, governments assess and collect taxes on the income of non-residents primarily through a process of withholding taxes from the payments made to the non-resident. This ensures that all applicable taxes are paid, even from those who are not residents of the country.

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How do governments assess and collect taxes on the income of non-residents?

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