One verified withholding fact at a time: the traps, the myths, and the numbers that decide real payments. Every card cites its primary source and links to the full analysis.
“Income code 24 is director's fees.”
Actual: Code 24 is qualified investment entity (QIE) distributions of capital gains. There is no 1042-S code for director fees at all. They report under code 17, compensation for independent personal services.
A correct rate under a wrong code still draws IRS matching notices. The code is what the IRS reads.
“One US board meeting makes the whole fee taxable.”
Actual: The US-France treaty reaches fees "for services rendered in the other Contracting State." The US taxes the US-performed share only: 3 of 10 meetings in New York means 30% × 3/10, not 30% on everything.
$20,000
The US Model treaty's entertainer threshold. Real treaties vary (higher, lower, or none), so the payee's treaty decides. Where it applies it is a cliff, not an allowance: exceed it and the full amount is taxable, not just the excess.
The trap inside the trap: reimbursed expenses count toward the $20,000. The hotel bill can push the fee over the edge.
A German director earns $100,000 a year on a US board. Every meeting is by video from Berlin. US withholding?
0%
Services are sourced where they are performed. No US presence, no US-source income, and a treaty cannot create tax the Code does not impose.
The US-Russia treaty has been suspended since August 16, 2024. Every income type withholds at the statutory 30%, whatever rate the payee's W-8 claims.
Not the only one: Hungary's treaty is terminated outright, and Belarus is suspended for trade-finance interest only.