Presentation on theme: "Slide 1 FastFacts Feature Presentation December 9 th, 2008 We are using audio during this session, so please dial in to our conference line… Phone number:"— Presentation transcript:
Slide 1 FastFacts Feature Presentation December 9 th, 2008 We are using audio during this session, so please dial in to our conference line… Phone number: Participant code:
Slide 2 Todays Topic Well be taking a look at… Hiring a Non U.S. Citizen
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.
Slide 5 Contact Us If you would like to submit a question during the presentation or if youre having technical difficulties, you can us at: You can also send us an instant message! GoogleTalk – AOL Instant Messenger – HopkinsFastFacts MSN –
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 7 Hiring a Non U.S. Citizen
Slide 8 Agenda Today well discuss: Information required to hire a non U.S. citizen to work in the U.S. 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 Introduction
Slide 10 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 Creating the ISR
Slide 12 Key Fields on the ISR
Slide 13 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 14 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 15 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 16 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 17 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 18 Arrival Date Scenarios Entered the U.S. from China for the first time on 08/26/08 on an F-1 visa to attend JHU as a graduate student. Does not have a U.S. Social Security number. Arrival date is 08/26/08. 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 2008 and arrived at JHU for graduate school in September 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 19 Form I-9
Slide 20 Form I-9 Form I-9 – Employment Eligibility Verification Original Form I-9 is completed by the International Student and Scholar Services Office or other office designated by the individual JHU school 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 21 Determining Tax Residency Status
Slide 22 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 non-resident aliens for tax purposes Determining residency status for tax purposes requires obtaining visa history, current visa status and original U.S. arrival date
Slide 23 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 master data on the new hire ISR.
Slide 24 Taxation
Slide 25 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 26 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 27 Tax Summary Chart Federal Income Tax Withholding State & Local Income Tax Withholding FICA (Social Security & Medicare Tax) NRA with WagesSubject to at graduated rates Exempt if holding an F-1 or J-1 visa NRA FellowshipSubject to at 14% flat rate Subject to at graduated rates Not applicable RA with WagesSubject to 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 28 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 29 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 30 Treaty Benefits
Slide 31 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 32 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 33 Tax Reporting
Slide 34 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 35 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 36 In Conclusion
Slide 37 Summary Required information when hiring a non US citizen: Citizenship country Visa type Original US arrival date Determination of correct tax residency status depends on this information Ensures the non U.S. citizen is properly taxed
Slide 38 Resources - JHU Tax Office JHU Tax Office is located on the Eastern Campus in Suite D200 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 Web site address: address: Telephone:
Slide 39 Other Resources JHU International Offices JHMI Office of International Student, Faculty and Staff Services: Homewood Office of International Student and Scholar Services: Carey Business School and School of Education One Stop Student Services Office: Peabody Office of International Student Affairs: SAIS International Student and Scholar Services Office:
Slide 40 Other Resources (Cont) Link to JHMI Office of International Student, Faculty and Staff Services Visa Chart: HRSS web site address: Link to sample NRA Form W-4 on HRSS web site:
Slide 41 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 ed to us during the presentation. If theres a question that we cant answer, well do some research after this session, and then the answer to all participants. Q&A
Slide 42 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 us at:
Slide 43 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… Thanks again!