2026 World Cup tax issues for foreign clients with U.S. income

For tax professionals, the 2026 FIFA World Cup is a reminder that even short-term U.S. activity can trigger federal withholding, information reporting and return filing obligations for foreign individuals and businesses.

The Taxpayer Advocate Service recently highlighted potential U.S. tax issues for foreign participants connected to World Cup activities, including athletes, performers, coaches, team personnel, media professionals and businesses providing event-related services. With the United States hosting many of the matches, practitioners may hear from clients who earned income tied to appearances, endorsements, media work, promotional events or other services performed in the U.S.

Quick take for tax pros advising foreign participants

1. Foreign individuals who are nonresident aliens may owe U.S. tax on compensation connected to services performed in the U.S.
2. U.S.-source nonemployee compensation may be subject to 30% federal withholding unless a lower treaty rate, statutory exemption or Central Withholding Agreement applies.
3. Even when tax is withheld, the taxpayer may still need to file a U.S. return to report the income, reconcile withholding, claim treaty benefits or request a refund.
4. State tax rules may also apply in each state where the foreign participant performs services.

Event-related services can create U.S.-source income

A World Cup-related issue may surface casually at first, during intake. A client may mention a short U.S. trip, promotional appearance, media assignment or temporary tournament contract. If the payment is tied to services performed in the United States, the income may be U.S.-source income.

For nonresident alien individuals, compensation for services performed in the U.S. is generally subject to U.S. tax. If the client receives U.S.-source nonemployee compensation, the payer may report the income on Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, and withhold 30% of the gross payment unless a lower treaty rate or exemption applies. For eligible foreign artists and athletes, a Central Withholding Agreement may provide a different withholding approach.

Keep in mind that clients may typically assume tax applies only after deducting travel, agent fees, lodging or other business costs. In many cases, withholding happens before expenses are considered, which can create cash flow issues if planning is not done before payment.

Worker classification drives the withholding path

One of the first questions practitioners should ask is whether the foreign participant was treated as an employee or an independent contractor. Employee wages for services performed in the U.S. generally fall under wage withholding rules using graduated rates. Nonemployee compensation may fall under the Form 1042-S reporting and withholding regime.

Treatment as an employee or nonemployee drives withholding and reporting, including which forms the client receives. It also shapes the filing analysis, including whether the client may be able to recover excess withholding.

Treaty claims depend on documentation before payment

Tax treaty benefits may reduce or eliminate U.S. tax or withholding, but clients usually cannot wait until filing season to think about documentation. To claim treaty benefits before payment, the taxpayer generally must provide the appropriate form to the withholding agent.

Nonresident alien individuals claiming treaty benefits for personal services income generally provide Form 8233 to the withholding agent. Other income types may require Form W-8BEN, Form W-8BEN-E or another applicable Form W-8. Clients may also need a U.S. taxpayer identification number. For individuals, this is generally a Social Security number (SSN) or individual taxpayer identification number (ITIN); entities may need an employer identification number (EIN).

Practitioners should ask about treaty-country residency, the type of income, the payer, documentation already provided and the timing of payment to help determine whether withholding was handled correctly.

Artists and athletes may need a Central Withholding Agreement

Foreign artists and athletes may be eligible for a Central Withholding Agreement (CWA) with the IRS. A CWA allows withholding to be based on estimated net income at graduated rates rather than on 30% withholding of gross income.

A CWA may be worth evaluating when the taxpayer has significant expenses tied to U.S. performances or appearances. Pay attention to timing; Form 13930, Application for Central Withholding Agreement, generally must be submitted at least 45 days before the first U.S. event covered by the application. A late or incomplete application may be rejected.

A CWA does not eliminate a filing requirement; the taxpayer still generally must file a U.S. income tax return for the year in which the U.S. activities occur.

Withholding does not always end the filing obligation

Before selecting a filing path, practitioners need to confirm whether the individual is a resident or nonresident alien for U.S. tax purposes. For a deeper refresher, see NATP’s article on determining residency status for U.S. tax purposes.

Withholding is not always the final step. A nonresident alien individual who must file generally uses Form 1040-NR, U.S. Nonresident Alien Income Tax Return, while a foreign corporation generally files Form 1120-F, U.S. Income Tax Return of a Foreign Corporation. The return is where the taxpayer reports U.S.-source income, reconciles withholding, claims allowable deductions or treaty benefits, and requests a refund if too much tax was withheld.

Intake questions to flag tournament-related tax issues

The World Cup is a timely reminder to ask targeted intake questions when foreign clients have U.S.-connected income. 

• Where were the services performed? 
• Who made the payment? 
• Was the taxpayer treated as an employee or contractor? 
• Was Form 1042-S issued? 
• Were treaty forms provided before payment? 
• Did the taxpayer perform services in more than one state?

If the client received tips for U.S.-based event, hospitality or promotional work, practitioners should evaluate whether the separate qualified tip deduction rules apply. The “no tax on tips” provision is not a blanket exclusion, and the valid Social Security number requirement may limit its use for some foreign taxpayers.

The tax issue may start with a global sporting event, but the planning principles are as familiar as home: 

1. Classify the income
2. Confirm the source
3. Review withholding
4. Gather documentation, and
5. Evaluate filing obligations before deadlines become problems

The original version of this article appeared on the Taxpayer Advocate Service website. NATP has republished it here with additional analysis and practical application notes for tax preparers advising small business clients.