UPP 192 Instructions - University of Chicago

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Nonresident Alien Tax-Withholding • Wage payments: In order to receive wages, Nonresident aliens must have a valid US social security number. Nonresident alien employees must follow special instructions when completing the IRS Form W-4. Nonresident aliens must list themselves as “SINGLE” (regardless of actual marital status), with “1” allowance, and request an additional amount of federal tax to be withheld from each check. Currently this “additional amount” is $15.29 for employees paid on the biweekly pay schedule, or $33.13 for employees paid on the monthly pay schedule. In addition to the Federal tax withholding, the University also withholds state income tax. Illinois state tax is generally withheld at the rate of 3%. • Scholarship or fellowship stipends, and other miscellaneous payments: Scholarship or fellowship stipends paid to Nonresident aliens are subject to a 14% federal tax-withholding rate. Other miscellaneous payments to nonresidents are generally subject to a flat 30% federal tax-withholding rate (see TAX TREATY EXEMPTIONS) FICA TAX-WITHHOLDING Social Security tax (also know as FICA) is an employment tax. FICA is withheld only from wage payments, and is deducted in two components: Old Age, Survivors, Disability Insurance or OASDI (6.20%) and Medicare (1.45%). FICA taxes will not be withheld from a student's wages when the student is registered and attending classes at the University of Chicago, and works on a part-time basis. FICA tax exemption for certain Nonresident aliens: Students who hold F-1 or J-1 classifications are exempt from FICA tax withholding for the first five calendar years they are in the U.S. Professors and researchers who hold J-1 classification are exempt from FICA tax withholding for the first two calendar years they are in the U.S. It is the Payroll Department's responsibility to determine which employees should be subject to FICA tax withholding during a particular calendar year. Note: The term calendar year refers to the period of January 1 through December 31. If you are present in the U.S. during any part of a particular calendar year, that year will count as one calendar year of U.S. presence. TAX TREATY EXEMPTIONS Certain international visitors may be able to claim exemption from U.S. taxes based on a tax treaty agreement between the U.S. and their home country. You should consult IRS Publication 901, U.S. Tax Treaties to see if a treaty between the U.S. and your country of residence actually exists. If a treaty does exist, you should determine if an article of the treaty covers the type of payment you will be receiving from the University, and if you will be able to meet all the requirements of the treaty. If a tax treaty article does exist, and covers the type of payment you will receive, you may claim the exemption from tax when you file your U.S. income U.S. tax return treaty (see TAX FILING). The IRS also allows you to claim tax exemption before the payment is made to you. To claim the exemption from tax withholding, you must either have a permanent social security number (SSN) or an individual taxpayer identification number (ITIN). (See note under Wages). Complete and submit the ORIGINAL forms to the University of Chicago Payroll Department. (Faxed forms are not accepted.) If you need to claim the exemption from tax-withholding for your: Wages (i.e. part-time student employment, salaries of researchers or professors, etc.): Submit IRS Form 8233, Exemption from Withholding on Compensation for the Independent Personal Services of a Nonresident Alien and revenue procedure statement 87-8 or 87-9 (contact Payroll for these forms). Note: Individuals who have applied for SSN and receiving wages, but not yet received their SSN, can attach a copy of the SSN application to the treaty forms to claim a treaty benefit. Note: Individuals whom have applied for SSN and receiving wages, but not yet received their SSN, can attach a copy of the SSN application to the treaty forms to claim a treaty benefit. Rev. 10/01 2 UPP192_Notes
Independent Contractor, honorarium or other miscellaneous payments: Submit a completed W-8BEN-I, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and the IRS Form 8233, Exemption from Withholding on Compensation or the Independent Personal Services of a Nonresident Alien. Scholarship or fellowship stipend payments: Complete the University Form W-8BEN-S, Certificate of Foreign Status of Beneficial Owner for Unites States Tax Withholding. Royalty payment: Complete the University Form W-8BEN-S, Certificate of Foreign Status of Beneficial Owner for Unites States Tax Withholding. TAX FILING International visitors who hold F-1, J-1 or H-1B classifications (and their spouses and dependent children) must file income tax returns regardless of whether or not they receive wages or scholarships in the United States. International visitors receiving miscellaneous compensation or royalty payments must file income tax returns regardless if a treaty applied or taxes were withheld. "Filing an income tax return,” means completing the appropriate forms to report the income (if any) that you received during a particular calendar year. By completing the forms, you determine whether or not you have met your U.S. tax liability (if any) for the calendar year. Generally, for each calendar year you are present in the U.S., you must complete and submit all tax returns by April 15 of the following year. In most cases, you will need to file at least two income tax returns per year, one with the IRS, and one with the tax-collecting agency in the state where you reside. People who live in Illinois file a tax return with the Illinois Department of Revenue. Individuals who resided in states other than Illinois may need to file more than one state income tax return. When Resident aliens file their tax returns, they are permitted to choose ONE of the following forms to complete and submit to IRS: Form 1040, 1040A, or 1040EZ. However, Nonresident aliens are required to complete either IRS Form 1040NR or 1040NR-EZ. Tax-Reporting Documents Issued By The University: The University is required to furnish certain taxreporting documents to you. In most cases you are required to attach these documents to your tax returns. If you were paid wages, and had tax withheld, the Payroll Department will mail you Form W-2, Wage and Tax Statement, by January 31 of the following calendar year. If you are a Nonresident alien, and received income that was exempt from tax-withholding, or subject to a flat withholding rate, the Payroll Department will mail you Form 1042s, Foreign Person’s U.S. Source Income Subject to Withholding, by March 15 of the following calendar year. For this reason, it is crucial that you provide the University Payroll Department with the most current address information. TAX INFORMATION For more information regarding U.S. taxation of international visitors, you should consult the following IRS publications: Publication 513, Tax Information for Visitors, Publication 519, U.S. Tax Guide for Aliens, and Publication 901, U.S. Tax Treaties. International visitors or department administrators may request copies of these publications, as well as IRS forms and instructions, by calling the IRS forms hotline at 1-800-TAX- FORM or visit the IRS web site at http:// www.irs.gov/. For assistance in completing the IRS or state income tax returns, please call the local offices of the IRS or Illinois Department of Revenue. If you have questions concerning the University's tax-withholding procedures, in-house forms or tax-reporting documents, contact the Alien Payroll Desk at (773) 702-5989. Rev. 10/01 3 UPP192_Notes
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UPP 192 Instructions - University of Chicago

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