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V. |
Nonresident Alien
Information |
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A. |
Tax Residency |
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Individuals from other countries
present in the United States must be taxed according
to their country of tax residency. These
individuals can be Permanent Residents, Resident
Aliens for Tax Purposes, or Nonresident Aliens.
While Permanent Residents and Resident Aliens for
Tax Purposes are taxed like U.S. Citizens,
Nonresident Aliens are taxed differently. The
Green Card Test and the Substantial Presence
Test are used to determine tax residency. |
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B. |
Green Card Test |
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The Green Card test is used to
determine Permanent Residency Status. A
permanent resident is someone who has been granted
authorization to live and work in the United States
on a permanent basis. An individual meets the
test on the date his or her permanent resident alien
status is approved by the U.S. Citizenship and
Immigration Service. The effective date is the
notice date on the form I-551 (Green Card or Alien
Registration Card) or on the I-797 (Notice of
Action). |
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C. |
Substantial Presence Test |
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The Substantial Presence Test is
used to determine whether an individual is a
Resident Alien for Tax Purposes or a Nonresident
Alien. To meet this test, the individual must be
physically present in the United States on at
least:
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31 days in the current
calendar year, and |
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183 days during the 3-year
period that includes the current year and
the 2 years immediately before that,
counting: |
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All the days present in the
current year, and |
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1/3 of the days present in
the first year before the current year, and |
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1/6 of the days present in
the second year before the current year. |
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Teachers and
Trainees |
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A teacher or a
trainee temporarily present in the United
States under a "J" or "Q" visa who
substantially complies with the
requirements for the visa is exempt from
counting days. This exemption lasts
until he or she has been physically present
in the United States for any part of
2
of the current and past
6
calendar years. |
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Students |
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A student temporarily
present in the United States on an "F,"
"J,", "M,", or "Q" visa and who
substantially complies with the requirements
of that visa is exempt from counting days.
This exemption lasts until he or she has
been physically present in the United States
any part of more than
5 calendar years. |
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Substantial Presence Test Worksheet |
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Number of Days (not
including exempt years) |
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Total |
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Current Year |
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1st Preceding Year |
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Divide by 3 |
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2nd Preceding Year |
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Divide by 6 |
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Total |
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If the grand total number of days
in the column on the right side of the worksheet is
183 days or greater and the individual will be
present in the United States for 31 days in the
current calendar year, the individual is a U.S.
resident for tax purposes. |
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Please note that individuals
falling under the Teacher/Trainee and Student
categories who exclude days of presence in the
United States must file a completed IRS form 8843
with their tax return. |
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D. |
Tax Residency and Taxes |
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Social
Security and Medicare Taxes |
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Nonresident
aliens are not subject to social
security during the time period they are
exempt from counting days. Once they
become a resident for tax purposes, even
if it is partially through the year,
the University must withhold Social Security and Medicare
taxes on all income earned through the
year. This will be deducted from the
first paycheck after the individual has
been notified that they are a tax
resident under the substantial presence
test. However, the student FICA
exclusion still applies and may still
exempt a 'F' or 'J' student from
coverage.
University Human Resources Policy HR0375
prohibits nonresidents from
participating in a retirement plan until
they are eligible for Social Security
Coverage. Once a nonresident pays
Social Security and Medicare Taxes and
meet all the other participation
guidelines for retirement coverage
listed in Policy HR0375, he or she must
be enrolled for membership in a
retirement plan. |
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Income
Tax Treaties |
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The United States
has tax treaties with a number of
foreign countries. Under these
treaties, tax residents of foreign
countries are taxed at a reduced rate or
are exempt from United States taxes on
certain items of income they receive
from sources within the U.S. Most
income tax treaties contain a "savings
clause" which prevents citizens or tax
residents of the United States from
using the provisions of a tax treaty in
order to avoid taxation of U.S. source
income. Some treaties, including
China, have an exception to the "savings
clause" that allows some tax residents
to claim the benefits of the tax treaty. |
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Tax Treaties for
Student Wages |
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Tax Treaties for
Student Scholarships |
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Tax Treaties for
Teachers and Researchers |
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Income
Tax Withholding |
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Unless exempted
by tax treaty, the University must
withhold income taxes on wage payments
to nonresidents. The amount to be
withheld is based on the IRS tax tables
for the payment year. Except for
nonresident alien students from India
and business apprentices from India, an
additional amount is added to wages
solely for the purpose of calculating
income tax withholding. For 2011,
the following table of additional
amounts is used. |
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Payroll Period |
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Add Additional |
| Biweekly |
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$
80.80 |
| Monthly |
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$ 175.00 |
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W4
Information
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All non-resident
alien employees are required to complete
a Form W-4. According to the
Internal Revenue Service, nonresident
aliens are required to: |
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Not claim
exemption from income tax
withholding, |
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Request
withholding as if they are
single, regardless of their
actual marital status, |
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Claim
only one allowance (if the
nonresident alien is a resident
of Canada, Mexico, or Korea, he
or she may claim more than one
allowance), and |
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Write
"Nonresident Alien" or "NRA"
above the dotted line on line 6
of the Form. |
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A nonresident
alien employee may request
additional withholding on form
W-4 at his or her option. |
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