Optional Practical Training And Taxes
Know Your Tax Status
Tax status is determined by the nonimmigrant's physical presence in the U.S. and visa status history. A nonimmigrant's tax status will be either Nonresident Alien or Resident Alien. Resident Aliens are taxed the same as a U.S. citizens but Nonresident Aliens are taxed under another set of rules.
You should know your tax status before completing any tax documents for your employer. If you previously worked at GMU or have in the past received a taxable scholarship from GMU; you will already know your tax status. If you cannot remember your status or do not know your status, you can refer to IRS Publication 519 for information on how to make the determination.
Top of the page
Know How to Complete the W-4 Form
This is a federally required form used by employers for determining how to tax an individual's pay for each pay period. Tax is calculated at a graduated rate based upon marital status, total number of exemptions claimed, pay period, and amount of gross pay. You will need to know how to complete the W-4 based upon your tax status.
Nonresident Aliens - Nonresident Aliens are required to complete the W-4 form as Single regardless of actual marital status; claim 1 withholding allowance for number 5; and write "Nonresident Alien" or "NRA" on the dotted line for number 6.
Employers, based on the NRA W-4, are required to calculate the withholding tax by adding an additional amount to the Nonresident Alien's pay each pay period for purposes of calculating the tax. Note that this calculation is only for purposes of calculating the tax. Individuals do not actually receive the additional income. If your employer has questions, you can direct them to IRS Publication 15 (Circular E Employer's Tax Guide).
Exceptions to withholding allowance:
-
Canada or Mexico - tax residents of Canada or Mexico can claim additional allowances for spouse/dependents the same as U.S. citizens.
-
Korea - tax residents of Korea may claim additional allowances for spouse/dependents living with them the same as U.S. citizens.
-
India - tax residents of India may claim additional allowances for spouse and additional allowances for dependents who are either U.S. citizens, Lawful Permanent Residents or Resident Aliens for tax purposes.
-
Exception to the special calculation:
India - Students and business apprentices from India are not subject to the special calculation for determining the withholding amount as applied to all other Nonresident Alien students.
Resident Aliens - Since Resident Aliens are taxed the same as U.S. citizens they are not restricted to how they complete the W-4 as Nonresident Aliens are. More information for how best to complete the W-4 can be found in IRS Publication 501; and IRS Publication 505.
Top of the page
Know if you are exempt from FICA taxes
Most employers may not be aware that certain foreign nationals can be exempt from FICA tax. You will need to inform them if you are exempt from this tax. There is not a special form to make the claim; however your employer can be directed to IRS Publication 15, page 17 and/or IRS Publication 519 page 48 for more information.
The criteria for the FICA exemption under the IRC 3121(b)(19) code is:
-
Be a Nonresident Alien for tax purposes
-
Be the primary visa holder in F, J, Q or M status, and
-
Be working in accordance to the primary purpose of the visa (loosely interpreted by the IRS to mean, working legally)
Top of the page
Know if you are an independent contractor or employee
There are different tax and reporting obligations for independent contractors versus employees. Companies who contract F1 students as independent contractors rather than employees will need to know the student's tax status in order to properly tax and report the income. It will be your responsibility to inform the company with whom you have contracted what your tax status is.
The rules are as follows:
Resident Aliens - subject to 1099 reporting
Nonresident Aliens - subject to 30% withholding and 1042s reporting
More questions?
If we haven't answered all of your questions, you may contact our office to schedule an appointment with the International Tax Coordinator by calling 703-993-2970 or via e-mail at oips@gmu.edu.
Top of the page |
