Presentation on theme: "Slide 1 FastFacts Feature Presentation August 17, 2010 We are using audio during this session, so please dial in to our conference line… Phone number:"— Presentation transcript:
Slide 2 Todays Topic Well be taking a look at… Hiring a Non U.S. Citizen
Slide 3 Todays Presenter Denise Church Senior Accountant, Tax Office in the JHU Controllers Office
Slide 4 Session Segments Presentation Denise will address hiring a Non U.S. Citizen. During Denises presentation, your phone will be muted. Q&A After the presentation, well hold a Q&A session. Well open up the phone lines, and youll be able to ask questions. Denise will answer as many of your questions as time allows. Carla Evans from Payroll Shared Services is also here and available to answer questions.
Slide 5 Contact Us If you would like to submit a question during the presentation or if youre having technical difficulties, you can email us at: firstname.lastname@example.org email@example.com You can also send us an instant message! GoogleTalk – HopkinsFastFacts@gmail.comHopkinsFastFacts@gmail.com AOL Instant Messenger – HopkinsFastFacts MSN – FastFacts@jhu.edu
Slide 6 Survey At the end of this FastFacts session, well ask you to complete a short survey. Your honest comments will help us to enhance and improve future FastFacts sessions.
Slide 8 Agenda Today well discuss: Information for hiring a non U.S. citizen to work in the U.S. Foreign National Information Form (FNIF) The importance of creating the ISR correctly How tax residency status is determined in SAP Proper taxation of non U.S. citizens Treaty benefits Tax reporting documents issued to non U.S. citizens
Slide 9 Assumptions Non U.S. citizen is present in the United States Has appropriate work authorization Required information Nationality (country of citizenship) Visa type Immigration documents Original U.S. arrival date Temporary or permanent U.S. Social Security number
Slide 11 What is the FNIF? All non-US citizens, except LPRs (green card holders), should complete the Foreign National International Form (FNIF) FNIF is completed by individuals that are either new hires or are changing their visa type or extending their current visa type. Located at http://finance.jhu.edu/depts/tax/fnif.pdfhttp://finance.jhu.edu/depts/tax/fnif.pdf Form is fill-able PDF Completed forms should be returned to Payroll Shared Services, Attention: Carla Evans Additional documents to be attached to the form include: Copy of passport, Visa and I-94 Departure Record Copy of work authorization document (e.g. Form I-20, DS- 2019, I-797, EAD card) Copy of Social Security card or ITIN card (when available)
Slide 12 Completing the FNIF Required information: Temporary or permanent U.S. Social Security Number Nationality (country of citizenship) Visa type Visa issue date Visa end date U.S. entry date Work authorization expiration date (should be the visa end date) This information is necessary to complete the ISR A copy of the completed form, without attachments, should be given to the Department Payroll Administrator Note: Forms without the required information and attached documentation will not be processed, and will result in payment delays.
Slide 15 Key Fields on the ISR Nationality- Country of citizenship Common Visa Types F-1 – Academic student J-1 – Exchange visitor (may be a student or a non-student) H1-B1 – Worker in a specialty occupation TN – Professional business person from Canada or Mexico (NAFTA) LPR – Lawful Permanent Resident – Green Card Holder
Slide 16 Key Fields on the ISR-continued Visa Issue Date- taken from immigration documents Visa End Date- taken from immigration documents Expiry of WP- taken from immigration documents Generally matches the visa end date
Slide 17 I-20 Form for Students F-1 academic student visa holders are issued the Form I-20 Use these dates to populate the Visa Issue Date and Visa End Date on the ISR Issued by JHU international offices JHMI (SOM, SOPH, SON) Homewood Carey Business School & School of Education Peabody SAIS
Slide 18 Form DS-2019 J-1 visa holders are issued Form DS-2019 Exchange visitor Student Non-student Important Information Box 3- Visa issue/end dates Box 4- Exchange Visitor Category (if the visitor is a student indicate this in the ISR comments section) Issued by JHU international offices
Slide 19 Original U.S. Entry Date Must be present in the U.S. and have appropriate work authorization Tourist visa history is not considered Date of initial arrival in the U.S.– not arrival at JHU Date of first arrival in the U.S. holding an F-1, J-1, H1-B1 visa Is the student/scholar coming to JHU from elsewhere in the U.S.? Does the non U.S. citizen already have a Social Security number? Tip: The first three digits of a SSN issued in MD usually begin with 212 – 220. A SSN beginning with any other three digits was probably not issued in MD.
Slide 20 Arrival Date Scenarios Entered the U.S. from China for the first time on 08/26/10 on an F-1 visa to attend JHU as a graduate student. Does not have a U.S. Social Security number. Arrival date is 08/26/10. Entered the U.S. from Germany on 09/04/04 to attend school at New York University. Returned to Germany for brief visits and vacations. Obtained a U.S. Social Security number in New York. Graduated from NYU in May 2010 and arrived at JHU for graduate school in September 2010. Arrival date is 09/04/04. Entered the U.S. from Australia on 06/21/06 as a J-1 research scholar. Had visited U.S. before holding a tourist visa on 10/15/01. Does not have a U.S. Social Security number. Arrival date should be 06/21/06.
Slide 22 Form I-9 Form I-9 – Employment Eligibility Verification Electronic Form I-9 is completed by the International Student and Scholar Services Office or other office designated by the individual JHU school. When Payroll Shared Services receives the permanent Social Security Number, it is entered into the electronic system to complete the E-verification process. Re-verification of Form I-9 is required to extend work authorization expiration date. Will be required as a result of a visa extension or the issuance of a new visa type.
Slide 24 Resident vs. Nonresident Alien Two separate United States Income Tax Systems One system applies to U.S. Citizens and Resident Aliens for tax purposes The other system applies to Nonresident Aliens for tax purposes Determining residency status for tax purposes requires obtaining visa history, current visa status and original U.S. arrival date
Slide 25 Tests to Determine Tax Residency Green Card Test A green card holder or LPR (Lawful Permanent Resident) is a visa type. These individuals are Resident Aliens for tax purposes by definition. Substantial Presence Test (SPT) Mathematical test calculated by length of time in the U.S. combined with visa type. Residency status based on the SPT is determined by the master data entered into the payroll record from the New Hire ISR. Foreign National Information Form (FNIF) should be used to obtain this master data.
Slide 27 Taxation of Resident Aliens Resident aliens are taxed exactly like United States citizens. They are entitled to the same deductions and credits. Not restricted when completing Federal Form W-4 Taxed in the U.S. on worldwide income Social Security and Medicare tax exemption applies if the resident alien is in full time student status
Slide 28 Taxation of Nonresident Aliens Nonresident aliens are not taxed like United States citizens. Most cannot claim dependents or a standard deduction on their federal income tax return. They are not entitled to the same deductions and credits. Nonresident aliens are restricted when completing Federal Form W-4 Nonresident aliens are taxed in the U.S. on income from U.S. sources only Social Security and Medicare tax exemption applies if the Nonresident Alien is holding an F-1 or J-1 visa
Slide 29 Tax Summary Chart Federal Income Tax Withholding State & Local Income Tax Withholding FICA (Social Security & Medicare Tax) NRA with WagesSubject at graduated rates Exempt if holding an F-1 or J-1 visa NRA FellowshipSubject at 14% flat rate Subject at graduated rates Not applicable RA with WagesSubject at graduated rates Subject to unless full time student RA FellowshipNot applicable Correctly identify nonresident aliens in the payroll system so they are properly taxed
Slide 30 Special Rules for NRA Forms W-4 NRAs cant claim Exempt Must check Single, or Married, but withhold at higher single rate box on line 3 Should enter a 1 on line 5 Write Nonresident Alien or NRA above the dotted line on line 6 of Form W-4
Slide 31 Examples of Incorrect Tax Treatment This is incorrect: A nonresident alien holding either an F-1 or J-1 visa earning wages is exempt from Social Security and Medicare tax withholding – if payroll record doesnt reflect NRA status their wages will be subject to these taxes. This is incorrect: Fellowship payments received by a Nonresident Alien holding an F-1 or J-1 visa are subject to federal income tax withholding at a flat rate of 14% and to MD income tax at graduated rates - if payroll record doesnt reflect NRA status these payments will not be subject to withholding.
Slide 33 Treaty Benefits for NRAs Many countries have negotiated income tax treaties with the United States. Treaty benefits will impact a nonresident aliens federal income tax. Student wage benefits are usually subject to a dollar limit Fellowship benefits usually provide an unlimited dollar amount Teacher/researcher benefits usually provide an unlimited dollar amount Maryland does not recognize tax treaty benefits The District of Columbia and Virginia do recognize tax treaty benefits
Slide 34 Processing Treaty Benefits The JHU Tax Office processes treaty benefits and creates the treaty info type IT0556 in the SAP payroll record. Forms Wages: Form 8233 is used to claim a withholding exemption from treaty eligible wages. It is completed by the employee and the JHU Tax Office and then forwarded to the IRS for processing. Fellowships: Form W8-BEN is completed to claim a withholding exemption from treaty eligible fellowship income. It is maintained by the JHU Tax Office.
Slide 36 Tax Reporting Documents- W2 Wage and Tax Statement issued each year to employees. Reflects total taxable wages earned each calendar year and total federal and state income tax withheld. Issued to nonresident alien employees who didnt claim a treaty withholding exemption on their wages or werent eligible for a treaty benefit.
Slide 37 Tax Reporting Documents 1042-S Reports treaty wages received by an NRA Reports non treaty fellowship payments received by an NRA and the federal tax withheld on these payments Reports treaty fellowship payments received by an NRA Note: Box 16 reflects recipients country of tax residence. This required field on Form 1042-S is derived from the nationality (citizenship country) in the SAP record.
Slide 39 Summary Required information when hiring a non U.S. citizen: Citizenship country Visa type Original U.S. arrival date Determination of correct tax residency status depends on this information Ensures the non U.S. citizen is properly taxed
Slide 40 Resources - JHU Tax Office JHU Tax Office is located on the Eastern Campus in Suite C020 Tax Office walk in hours – No appointment necessary Tuesday and Thursday afternoon 2:00 PM – 4:30 PM Wednesday morning 9:00 AM – 12:00 PM Website address: http://finance.jhu.edu/depts/tax/index.htmlhttp://finance.jhu.edu/depts/tax/index.html E-mail address: Tax@jhu.eduTax@jhu.edu Telephone: 443-997-8688
Slide 41 Other Resources JHU International Offices JHMI Office of International Student, Faculty and Staff Services: http://www.hopkinsmedicine.org/intlsvcs/ http://www.hopkinsmedicine.org/intlsvcs/ Homewood Office of International Student and Scholar Services: http://web1.johnshopkins.edu/isss/ http://web1.johnshopkins.edu/isss/ Carey Business School and School of Education International Services: http://onestop.jhu.edu/carey/international/ http://onestop.jhu.edu/carey/international/ http://onestop.education.jhu.edu/international/index.html Peabody Office of International Student Affairs: http://www.peabody.jhu.edu/isa http://www.peabody.jhu.edu/isa SAIS International Student and Scholar Services Office: http://www.sais-jhu.edu/students/international/office-information.htm
Slide 42 Other Resources (Cont) Link to JHMI Office of International Student, Faculty and Staff Services Visa Chart: http://www.hopkinsmedicine.org/intlsvcs/visachart.pdf http://www.hopkinsmedicine.org/intlsvcs/visachart.pdf HR/Payroll Shared Services web site address: http://ssc.jhu.edu/hr_payroll/index.html Link to sample NRA Form W-4 on HR/Payroll Shared Services site: http://ssc.jhmi.edu/hr_payroll/DataFiles_HR/taxform.pdf http://ssc.jhmi.edu/hr_payroll/DataFiles_HR/taxform.pdf
Slide 43 Were going to open the phone lines now! There will be a slight pause, and then a recorded voice will provide instructions on how to ask questions over this conference call line. Well be answering questions in the order that we receive them. Well also be answering the questions that were emailed to us during the presentation. If theres a question that we cant answer, well do some research after this session, and then email the answer to all participants. Q&A
Slide 44 Thank You! Thank you for participating! We would love to hear from you. Are there certain topics that you would like us to cover in future FastFacts sessions? Would you like to be a FastFacts presenter? Please email us at: firstname.lastname@example.org
Slide 45 Survey Before we close, please take the time to complete a short survey. Your feedback will help us as we plan future FastFacts sessions. Click this link to access the survey… http://connect.johnshopkins.edu/fastfactssurvey/ http://connect.johnshopkins.edu/fastfactssurvey/ Thanks again!