Hiring household staff who worked abroad or on yachts: Social Security numbers, residency status, and payroll

Senior household staff often come from careers that crossed borders: hotel and estate work overseas, years on private yachts in foreign waters, or service with families based in other countries. Those backgrounds raise tax and payroll questions that a domestic hire does not. The worker's immigration status, tax residency, and identification number all affect what goes on the payroll and the W-2.

This post covers the payroll and tax questions that come up when a household hires someone whose recent work was outside the United States or at sea. It does not cover how to recruit or evaluate staff, and it does not address immigration law. Whether a person is authorized to work in the United States, and under what visa, is a question for an immigration attorney. This post starts after that question is answered.

Work authorization comes first, and it is not a tax question

A household employer must complete Form I-9 for each household employee who is not a sporadic worker, by the end of the third business day of work. The I-9 confirms identity and work authorization. Nothing in the tax rules substitutes for it, and a taxpayer identification number does not establish work authorization. If the worker's status is unclear, stop and involve an immigration attorney before any payroll is run.

The identification number on the W-2

A Form W-2 must show the employee's Social Security number. An Individual Taxpayer Identification Number (ITIN) is not valid for wage reporting, because ITINs are issued to people who are not eligible for a Social Security number. A worker who is newly authorized to work may have applied for an SSN and not yet received it. In that case:

• Record that the employee applied, and keep a copy of the receipt if one is available.
• Run payroll as usual and withhold as required.
• When the SSN arrives, update the payroll records. If a W-2 was filed with "Applied For," file a corrected W-2 (Form W-2c) with the number.

Tax residency is separate from immigration status

For income tax purposes, a non-citizen is either a resident alien or a nonresident alien. A green card holder is a resident alien. Others generally become residents under the substantial presence test: at least 31 days in the United States this year and at least 183 days over three years, counting all of this year's days, one-third of last year's, and one-sixth of the year before. Certain days, such as days as a crew member of a foreign vessel in transit, may not count.

This matters for payroll:

• Resident aliens complete Form W-4 like any other employee.
• Nonresident aliens follow special Form W-4 instructions in IRS Notice 1392. They generally cannot claim the standard deduction for withholding purposes, and the employer adds an amount to wages when figuring withholding.

A worker who arrives mid-year may be a nonresident for part of the first year and a resident for the rest. That is the employee's return to sort out, but the employer's W-4 should match the current status.

Social Security and Medicare

Wages for household work performed in the United States are generally subject to Social Security and Medicare regardless of the worker's citizenship, once the 2026 threshold of $3,000 in cash wages is met. Exceptions exist for some visa categories, such as certain students and exchange visitors in specific roles, but they rarely apply to full-time household staff.

Totalization agreements between the United States and some countries can exempt a worker from U.S. Social Security when the worker is temporarily sent to the U.S. by an employer in the other country and stays covered there. The worker needs a certificate of coverage from the other country. A household that hires a worker directly is usually not in that situation.

Workers employed by a foreign family while in the United States

A foreign family that spends part of the year in the U.S. may bring its own staff. If those staff perform household work in the U.S. for the family, U.S. payroll rules can apply to the U.S. work even though the employer and the worker are foreign. This is complicated, and it intersects with visa rules for personal employees. A U.S. preparer and an immigration attorney should look at it together before the visit.

Staff coming from yacht crews

Former yacht crew often worked under contracts with management companies, on foreign-flagged vessels, and outside U.S. waters, sometimes for years. That history usually means:

• No U.S. W-2 history, and sometimes no U.S. tax returns, even for U.S. citizens who should have filed. U.S. citizens are taxed on worldwide income, and may qualify for the foreign earned income exclusion if they meet its tests. That is the worker's matter, but it can affect when they can document income for a lease or loan.
• Pay in euros or other currencies, with contracts governed by foreign law.
• Benefits like crew housing and meals aboard that will not continue on land.

None of this changes what the household does. Once the person works for the household in the United States, the household's payroll rules apply from day one.

Paying into a foreign account

Some workers ask to keep receiving pay in a foreign bank account or in another currency. The payroll rules do not change: wages are figured and reported in U.S. dollars, and withholding is calculated the same way. If the household converts currency, record the rate used for each payment. Paying part of a salary abroad "outside payroll" is still wages and still belongs on the W-2. The worker's foreign accounts may create their own reporting duties, such as the FBAR for U.S. persons with foreign accounts over $10,000 in total at any time in the year. That is the worker's filing, not the household's.

State issues

A worker from abroad becomes a state taxpayer when they start work in the state. They need a state withholding certificate if the state has one. If the worker spends part of the year traveling with the family outside the U.S., wages for work performed abroad are still reported on the W-2, and for a U.S. citizen or resident employed by an American employer, Social Security and Medicare generally still apply. The state treatment of wages for work done abroad varies.

The scored diagnostic

Score each item 0, 1, or 2. Zero means not done. One means in progress. Two means done and documented.

Item	0, 1, or 2
Form I-9 is completed on time, with work authorization confirmed
Immigration questions were reviewed by an attorney where status was unclear
A valid SSN is on file, or the application is documented
Tax residency status is identified for withholding
Form W-4 follows Notice 1392 for nonresident aliens
Social Security and Medicare apply, or an exception is documented
State withholding certificate is on file
Corrected W-2s are planned when an SSN arrives after filing

A total of 13 to 16 means payroll is set up correctly. A total of 8 to 12 means a form may be wrong. Below 8, pause and review with your preparer and an attorney.

Illustrative: a former yacht interior lead hired as a house manager

Illustrative: A family hires a U.S. citizen who spent eight years as interior crew on foreign-flagged yachts, paid by a management company in euros, as their house manager starting April 1, 2026. She has an SSN and a passport for the I-9. The family runs standard household payroll, withholds Social Security, Medicare, and income tax under her W-4, and registers in their state. She tells them she has not filed U.S. returns for two of her crew years. The family's preparer does not represent her, but suggests she see her own EA or CPA, because her prior filings are her own matter and may involve the foreign earned income exclusion.

Who owns what

• The household: the I-9 and collecting the forms.
• An immigration attorney: work authorization and visa questions.
• Your preparer: withholding setup, Social Security exceptions, and state registration.
• The employee's own preparer: the employee's residency status and prior-year returns.

Next step: before an offer to anyone who has recently worked abroad, confirm work authorization with counsel and ask your payroll provider whether Notice 1392 applies.

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Educational only. This is not tax or legal advice for your situation. Consult your own CPA, EA, or attorney before acting.