1. Tax Residency Substantial Presence Test
Non-resident alien for tax purposes
Special taxation rules
Resident alien for tax purposes
Taxes withheld same U.S. citizens

2. Substantial Presence Test
Green card Test
Permanent Resident anytime during tax year
Time test
31 days during current year and
183 day formula
All days of current year
1/3 days of previous year
1/6 days of second previous year
Do not count exempt days
Rules specify which days count as a day

3. W-4 Generally limited to Single 1 or 0
Pay is grossed-up before withholding is determined
Monthly $
Biweekly $86.50
Weekly $43.30
Line 6 write “nonresident alien” or NRA
Line 7 cannot claim exempt
IRS Notice 1392 for instructions

4. Social Security and Medicare Taxes
Most nonresident and resident aliens subject
Special Rules apply to F, M, J, or Q visitors
Mostly teachers, researchers, and students
Exempt as long as they remain nonresident alien for tax purposes
Dependents do not receive exemption
Totalization Agreements
Bilateral agreements when paying similar taxes to home country
Taxes withheld in error
Employer should refund to collect ER FICA
Form 843 can be submitted by individual if employer does not refund

5. Tax Treaties Bilateral agreements between nations
Most for specific income types
Reduce or eliminate taxes
Lower withholding percentages
Exempt income up to an annual salary cap
Time limitations
Residency/ physical presence limitations
Retroactive/ prospective loss
Reported on From 8233 or W8 (multiple versions)

6. Tax Reporting of Wages W-2 1042-S
Most wages for resident and nonresident aliens reported on Form W-2
1042-S
Payments to be included on 1042-S
Treaty exempt income
Non-wage payments
Scholarship and fellowship
Independent Contractor, Royalties, Other Income
Gambling winnings

7. Nonresident Taxation Subject to taxes on U.S. source income only
Services performed outside U.S. are foreign sourced income
Some earnings sourced at payer
Royalties
Scholarships and fellowships
Special rules for educational activities outside the U.S.
Prizes awards
Special rules for certain prizes/awards
Short term visitors special rule
U.S. earned income can be considered foreign sources if these criteria apply:
In the U.S. for less than 90 days
Income is less than $3000

8. 1042-S and 1042
Form 1042-S
Issued to individuals by March 15th of following year
Good idea to issue closer to W-2s
Filed for individuals and businesses
Form 1042
Filed by March 15th of the following year
Similar rules to paper/electronic submission as SSA

9. Immigration Status Individual must have proper status to work in U.S.
Authorized by specific school or employer
H-1B, O-1, E-3
F-1, J-1, M-1, Q-1
Some statuses require Employment Authorization Card
Dependent visas
F-1 OPT
Not authorized to work
B-1/B-2 (can be independent contractors in some circumstances)
ESTA (can be independent contractors in some circumstances)

10. Nonresident Resources
IRS
IRS Publication 515 – Withholding of Tax on Nonresident Aliens and Foreign Entities
IRS Publication 901 – U.S. Tax Treaties
Form W-4
Notice 1392
M-274- I-9 Handbook for Employers breaks
Rules for visas/work authorization
Two major software providers
Thompson Reuters
Artic International