For Federal Income tax purposes, non-citizens of the United States are classified by the Internal Revenue Service (IRS) as either RESIDENT or NONRESIDENT aliens. Non-citizens of the United States are required to have a valid VISA classification before payments are made. The IRS tax code maintains two different withholding requirements for resident and non-resident aliens. Before a non-citizen of the United States is paid as an employee (wages), or non-employee (honoraria, scholarships and fellowship grants); residency status has to be determined. The IRS has two tests for residency status: the "green card" test and the "substantial presence" test.
GREEN CARD TEST -A lawful permanent resident of the United States at any time during the calendar year. Holds an immigrant visa (also known as green card).
- SUBSTANTIAL PRESENCE TEST **
Non-citizen must be physically present in the United States on at least:
- 31 days during the current calendar year, and
- 183 days during the current year and the 2 preceding years, calculated as follows:
- All days in current year plus
- 1/3 of days in first preceding year plus
- 1/6 of days in second preceding year
You generally DO NOT COUNT days the non-citizen is in the United States as
- F, J, M or Q visa student for five (5) years.
- F, J, M or Q visa teacher/researcher for two (2) years.
A nonresident alien individual married to either a U.S. citizen or resident alien may choose to be treated as a resident alien for income tax purposes. Wages paid to these individuals are subject to the withholding rules that apply to U.S. citizens and residents.
Federal taxes are generally deducted at the rate of single status with one allowance.
Persons exempt under a TAX TREATY between their country and the United States. For the current list of tax treaty countries, refer to UCOP Financial Accounting.
In addition to the form UCW-8BEN and form UCW-4NR/DE4, employees exempt under a tax treaty must also complete and submit the following forms:
Note: All applicable forms are obtained after the completion of the required fields from the Glacier software.
Social Security (OASDI) and Medicare
Nonresident aliens holding F-1 or J-1 visas are exempt from Social Security and Medicare taxes. Aliens with other visa types employed by UCR are subject to Social Security and Medicare taxes. Career employees pay Social Security and Medicare taxes. Non-career (casuals) employees pay Defined Contribution Plan (DCP-casual) in lieu of Social security plus Medicare tax. Individuals who have established residency under the substantial presence test are also subject to Social Security and Medicare taxes.
The California Franchise Tax Board does not make a distinction between foreign individuals and U.S. citizens when it comes to withholding. Nonresident aliens are subject to the same state tax withholding rules as citizens. No one from the Payroll Office can advise an employee on the number of exemptions to claim on their UC W-4/DE 4. Individuals must seek advise from someone who is licensed to prepare taxes, or use the worksheet that is in the UC W-4/DE 4 packet.
Nonresident Alien Employee's Federal-State Withholding Allowance Certificate (UC W-4NR/DE4)
DOCUMENTS ISSUED AT THE END OF THE CALENDAR YEAR
All foreign individuals receiving U.S. source income are required to file income tax returns. Income type and residency status will determine which type of income statement the individual will receive. They also determine the type of income tax returns that need to be filed. It is recommended that individuals consult a licensed tax preparer or the Internal Revenue Service (IRS).
EMPLOYEES - No tax treaty exemption - Will receive a W-2 for federal and state taxes. Individuals should file a 1040NR for federal tax and the appropriate state form depending on state residency status.
EMPLOYEES - Exempt under a tax treaty - Will receive 1042S for federal tax and W-2 for state tax. Individuals should file a 1040NR for federal and the appropriate state form depending on state residency status.