Nonresident Alien Employees
GLACIER is required:
As an employer of nonresident alien (NRA) employees, the University of Utah is required by the Internal Revenue Services (IRS), the U.S. government tax authority, to comply with international employee tax laws. GLACIER is a secured web-based NRA tax compliance system utilized by the University of Utah to determine international employees’ tax residency, withholding rates, and income tax treaty eligibility. GLACIER also manages NRA’s paperwork, maintains NRA’s data, and prepares tax forms and required statements.
Once an international individual is hired, an email is generated directing the employee to the GLACIER website. The employee is required to enter information into GLACIER and submit the required forms and documents to the Tax Services Dept. within seven (7) days of receipt of the email from (this is not spam). Otherwise, the maximum amount of tax will be withheld from their paychecks.
The following is general information offered as a resource to 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 and Medicare taxes (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.
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. The existence of a tax treaty does not automatically ensure an exemption from tax withholding; rather, you must meet the requirements for the exemption outlined in the tax treaty and provide all required GLACIER forms and Immigration documents listed on their Tax Summary Report.
*Please note that an individual can either take the treaty benefits with the University of Utah or on their own tax returns at in the following year. In other words, if the University of Utah cannot facilitate a tax treaty due to some requirements are not met; the individual can claim it in their tax returns.
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.
*When you receive income in the U.S., you generally must pay tax and report that income in both the U.S. and your home country. If you are eligible and do claim a tax treaty exemption, you must still file a U.S. federal tax return. Also, you may be required to report and/or pay additional tax on your U.S. income in your home country; you should check with the tax authorities in your home country for any applicable tax reporting or payment requirements.
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 in GLACIER.
__ Form W-2 This form is issued by January 31st in CIS.
FICA tax (Social security tax and Medicare tax) 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 FICA tax 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 FICA tax 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.
You may wish to consult the following resources in order to gain further understanding of your tax situation:
Internal Revenue Service
Utah State Tax Commission
IRS Publication 4, Student’s Guide to Federal Income Tax
IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Corporation
IRS Publication 519, U.S. Tax Guide for Aliens
IRS Publication 901, U.S. Tax Treaties
IRS Publication 970, Tax Benefits for Education – see Chapter 1, Scholarships/Fellowships
Please note that the Tax Services Dept. cannot provide individual tax consultation. NRAs will receive an instruction email from the International Student & Scholar Services (ISSS) in January about Sprintax software. Please visit ISSS website for information. 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. It is also possible to receive more than one 1042-S Form. For example, if you received wages/compensation type payments and non-service scholarship/fellowship type payments you will receive a 1042-S for each type of income.