Non-Resident Alien Taxation

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Non-Resident Alien Taxation

• OSU Payroll Office
• Anita Gurule [phone]
• anita.gurule_at_oregonstate.edu

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Outline of presentation

• Form W-4 - Non-Resident Filing Requirements
• CO-NRA - The Non-Resident Alien Information
  Request Form
• Tax Treaties - What, Why and When

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Non-Resident Alien W-4 Filing REQUIREMENT

• Box 3 - Single
• Box 5 - 1 Allowance
• Non-Residents are not allowed to file EXEMPT

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Exceptions to the Non-Resident W-4 Filing
Requirement

• MEXICO, CANADA KOREA
• Box 3 - Must file Single
• Box 5 - May file more than 1 allowance

• INDIA - STUDENTS ONLY!
• Box 3 - Must file Single
• Box 5 - May file more than 1 allowance

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The W-4 Default

• If the Non-Resident Employee refuses to file a
  W-4 as outlined in the W-4 requirement - then
  income taxes will be withheld at the rate of
  Single - Zero allowances, the maximum rate.
• Cf. Treas. Regs. 31.3402.(f)(2)-(1)e

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Please Remember for the W-4!

• For any employee If the W-4 has been altered
  (ie. Allowances scribbled out and re-written)
  the W-4 will be defaulted to Single-0 and the
  employee will be required to file a new W-4.
• University ID must not be used on the W-4. We
  must have the employees SSN.

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W-4 Exercise -What is wrong with these W-4s?

• Form 1
• NRA filed exempt
• Form 2
• Allowances scratched out
• Form 3
• University ID instead of SSN

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CO-NRA - Oregon University Systems Alien
Information Request Form

• Payroll and the OUS Controllers office use the
  CO-NRA to determine an employees tax status.
• The CO-NRA is required for all Non-Resident Alien
  employees, including those with H1-B and TN
  visas.

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Important Details - CO-NRA

• Copies of the I-94 and I-20 or DS-2019 (formerly
  the IAP-66) must accompany the CO-NRA.
• It is important to use a current CO-NRA (check
  the year on the backside of the form).
• The employee must complete and sign the CO-NRA.
  By signing it, they are verifying the information
  on it is correct.

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Tax Treaties - Form 8233

• 46 Available tax treaties for employees of OSU.
• Not guaranteed that an employee is eligible for a
  tax treaty.
• Country and status type (teaching / research vs.
  student / trainee) specific.

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More on Tax Treaties...

• The 8233 must be accompanied by an Attachment
  Letter provided by the OUS Controllers Office.
  Attachment Letters are available in the Payroll
  Office.
• Please contact me if you have any questions
  concerning a tax treaty.
• More information concerning tax treaties is
  available in IRS Publication 901.

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Tricky Tax Treaties

• US/Canada Treaty is retroactively taxable if the
  employee earns more than 10,000 during the
  calendar year.
• US/Germany Treaty for Students is retroactively
  taxable if the student visit exceeds 4 years.
• Teaching/Research Treaties with India, The
  Netherlands, Thailand, and the UK are
  retroactively taxable if the visit exceeds two
  years.

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Non-Resident Alien FICA Exemption

• Non-Resident Alien Employees in F, J, M or Q Visa
  status are FICA exempt.
• Only while employee is a Non-Resident and
  employment is consistent with the purpose of the
  visit.

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Additional Resources

• IRS Publication 519 - U.S. Tax Guide for Aliens
• IRS Publication 15 - Circular E, Employers Tax
  Guide

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Any Questions?