Nonresident Alien Employees

(Revised 1/11)

Appointment with Tax Services Required

Nonresident alien employees need to make an appointment with Tax Services in order to complete their required tax paperwork. Please click here to schedule an appointment with Tax Services. The nonresident alien will need to bring the following to the appointment: social security number, passport, and visa. Do not make an appointment until you have your social security number.

Introduction

The following is general information offered as a resource to nonresident alien (NRA) University of Utah employees. It is not to be considered as tax advice. Your individual circumstances may not be covered in this information sheet. If you would like to consult additional resources, please refer to the list at the end of this information sheet. The Tax Services Office cannot provide you with individual tax consultation.

As a University of Utah employee your paychecks may have the following taxes deducted from your gross earnings:

Federal (United States) income tax
Utah state income tax Federal
Social Security tax (also called FICA)

Federal income tax

People who earn payroll income must pay federal income taxes unless such income is exempt under a tax treaty (see below.) The amount of income that is taxable and the percentage of taxes withheld depend in part on whether you are a resident or a nonresident for tax purposes. Residence or nonresidence for tax purposes is not the same as residence (immigrant status) or nonresidence (non-immigrant status) as for immigration purposes. If you are a Resident, the University will withhold a portion of your income each time you are paid and submit that amount to the federal government on your behalf as federal taxes withheld. The amount withheld is computed based on your income level and the number of exemptions you claim for your spouse and children. According to Internal Revenue Service (IRS) regulations, NRA withholding is based on one exemption for yourself. In general, an NRA is not entitled to exemptions for a spouse or children.

Tax Treaties

An NRA’s payroll earnings may be exempt from federal and state income tax pursuant to an income tax treaty between their country of residence and the United States. For a current list of tax treaties please consult IRS publication 901 or the following website provides access to current tax treaties: Windstar Technologies. If you would like to apply the benefit of a tax treaty to your payroll earnings you must complete IRS Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. Please make an appointment to fill out Form 8233 at the Tax Services office. Click Here to make an appointment.  You will need to bring your passport and visa with you to your appointment to fill out Form 8233. A fully completed Form 8233 requires a social security number. Once you have fully completed Form 8233, Tax Services will verify the information and forward the Form to the IRS. The IRS has a ten day review period to accept or reject the form. We cannot apply the treaty benefits to payroll withholding until the ten day review period is over. Form 8233 is required for each calendar year.

Federal Tax Return

All NRAs present in the United States under an F, J, M, or Q visa must file a federal tax return, even if they had no U.S. source income. In the tax return you compute the actual income for the year and the exact amount of taxes owed and compare that to the amount of taxes withheld by your employers. You either pay additional taxes to the government or request a refund from the government based on the difference between the amount owed and the amount actually paid. Federal tax returns are generally due for the calendar year by April 15 of the following year. NRA’s file tax return Form 1040NR or 1040NR-EZ. Once an NRA becomes a resident alien for tax purposes, they are entitled to file Form 1040, 1040-EZ or 1040A. However, if an NRA becomes a resident for tax purposes and still is entitled to treaty benefits, they must file Form 1040NR to claim the treaty benefits.

Utah State Tax

Each state makes its own rules on the taxation of individuals and businesses. Some states have no income tax and others have tax systems which are quite different from the federal system. Utah has an income tax that starts with the federal adjusted gross income. Therefore, if you have a federal tax treaty which exempts all of your income from tax, generally you will owe no Utah income tax. The Utah State Tax form you would complete is the TC-40.

Tax Statements Issued by the University

You will be issued a W-2 and/or 1042-S tax statement from the University. If you had a tax treaty that is unlimited in the amount paid that is exempt from withholding and no taxes are deducted from your Payroll checks you will receive only a 1042-S. If your tax treaty is limited in the amount that is exempt from withholding and you were paid over that tax treaty limit with taxes deducted you will receive both a W-2 and a 1042-S. If there is no tax treaty, your wages are reported on a W-2.

These forms are used to complete your Federal 1040NR or 1040NR-EZ and Utah State TC-40.

__ Form 1042-S: This form is issued by March 15th.

__ Form W-2 This form is issued by January 31st.

FICA Tax

Social security or FICA taxes are required on payroll earnings at a rate of 15.3%. Half of that is paid by the employer and half is paid by the employee and withheld from the employee’s gross pay. NRAs may be exempt from FICA tax. F-1 students and J-1 students and scholars are exempt from social security taxes for the period of time they are nonresident aliens for tax purposes if their employment is directly related to their purpose for being in the United States.

Generally, authorized F-1 and J-1 employment, including practical or academic training, is exempt from social security taxes provided you are a nonresident for tax purposes. Students who have been in the U.S. for more than five calendar years will be treated as residents for tax purposes. Non-students with J-1 visas who have been in the U.S. for more than two calendar years are considered residents for tax purposes and are required to pay FICA taxes.

F-2 and J-2 visa holders are not exempt from FICA tax. The primary purpose of the F-2 and J-2 visa holders are to accompany the “-1” visa holder not to be a student, teacher or researcher.

Student visa holders who become resident aliens may be entitled to claim a “student FICA” exemption from FICA tax. The Payroll Accounting administers the student FICA exemption.

Additional Resources

You may wish to consult the following resources in order to gain further understanding of your tax situation:

Analysis of current tax treaties – Windstar Technologies

You can print forms from these websites:
Internal Revenue Service
Utah State Tax Commission

Additional tax information on the IRS (Internal Revenue Service) Website:
Publication 4, Student’s Guide to Federal Income Tax
Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Corporation
Publication 519, U.S. Tax Guide for Aliens
Publication 901, U.S. Tax Treaties
Publication 970, Tax Benefits for Education – see Chapter 1, Scholarships/Fellowships

In order to prepare your income tax returns, please contact International Student & Scholar Services (ISS) for a software access code. ISS is located in the University Union Room 410 and can be reached by phone at 801-581-8876. Please note that you will need Form W-2 and/or Form 1042-S to complete your income tax returns. You may receive one OR both of these forms.