Pub 17

Foreign Employer 

   Special rules apply if you work for a foreign employer. 

   U.S. citizen. If you are a U.S. citizen who works for a foreign government, an
   international organization, a foreign embassy, or any foreign employer, you must
   include your salary in your income. 

   Social security and Medicare taxes. You are exempt from social security and
   Medicare taxes if you are employed in the United States by an international
   organization or a foreign government. However, you must pay self-employment tax
   on your earnings from services performed in the United States, even though you are
   not self-employed. This rule also applies if you are an employee of a qualifying
   wholly-owned instrumentality of a foreign government. 

   Non-U.S. citizen. If you are not a U.S. citizen, or if you are a U.S. citizen but also
   a citizen of the Philippines, and you work for an international organization, your
   salary from that source is exempt from tax. If you work for a foreign government in
   the United States, your salary from that source is exempt from tax if your work is
   like the work done by an employee of the United States in that foreign country and
   if the foreign government gives an equal exemption for the salary of the U.S.
   employee. 

   Alien status. If you are an alien and you file a waiver under section 247(b) of the
   Immigration and Nationality Act to keep your immigrant status, different rules may
   apply. 

Pub 514

If you have paid or accrued foreign taxes to a foreign country on foreign sourced
   income and are subject to U.S. tax on the same income, you may be able to take
   either a credit or an itemized deduction for those taxes. Taken as a deduction,
   foreign income taxes reduce your U.S. taxable income. Taken as a credit, foreign
   income taxes reduce your U.S. tax liability.