Payroll

A Part of Accounting Services

Foreign Visitor Tax Guide

The information in this publication is to be used as a guide by UNCG faculty, staff, and foreign visitors (Students, Teachers, Researchers, and Guest Lecturers). In addition, it is to be used as a reference tool for university personnel that interact with foreign visitors who have a financial relationship with UNCG.

This guide does not cover all tax situations. It covers only those most common to the majority of foreign students, faculty, and staff. It presents basic information about determining the tax status of various kinds of university payments to students, faculty, and staff. It is intended to provide information that will assist foreign visitors and university personnel in making decisions concerning the tax implications of payments that UNCG makes to the foreign visitors.

The guide specifically provides information about three types of payments to foreign visitors:

  • Section 1 | Employee Compensation (Salary and Wages)
  • Section 2 | Honorarium and Expense Reimbursements
  • Section 3 | Scholarships, Fellowships and Grants

UNCG must fulfill its tax reporting obligations and can, in case of a tax question or problem, assist in supplying payroll and other appropriate documentation to explain payments made to individuals.

Users of this guide should be aware of the necessary limitations on the information presented herein. While it is hoped that this material will be useful, it should not be construed as a complete treatment of all tax or immigration questions.

This publication in no way should be construed to be the rendering of legal or tax advice. Each reader of this publication is responsible for determining the extent to which the information presented in this publication is appropriate to his/her situation. In assessing legal and tax obligations, each reader should consult with qualified legal and/or tax counsel.

Foreign students, faculty, and staff with tax questions or problems are advised to seek assistance from the IRS, a CPA, or attorney. In the U. S., the individual taxpayer is responsible for filing an appropriate and accurate tax return and negotiating all tax matters with the IRS. Taxpayer assistance is available from your local IRS office or by calling the IRS toll free taxpayer assistance number, 1-800-829-1040.


Salary and Wage Payments to Nonresident Aliens (NRA)
Department personnel, who propose to employ a Nonresident Alien, must determine if the NRA has a U.S. Social Security Number and a visa type that permits employment. NRA employees must have a U.S. Social Security Number before their tax documents can be filed with the IRS and their employment data entered into the UNCG (HRS) payroll system. If the NRA does not have a U.S. Social Security Number, he/she should go to the local Social Security Office and complete a Form SS-5 (Application for a Social Security Card). It will be necessary to have documentation to indicate that they will be employed at the university. This is usually in the form of a letter from the employing department. Before going to the Social Security Office, it is suggested that the International Programs Office be contacted to assist with questions and proper documentation.

To strengthen homeland security in the aftermath of September 11th, Social Security has taken extra steps to ensure the integrity of Social Security numbers. The changes to the way Social Security assigns numbers and issues cards may cause a delay of several weeks or months in receiving a number. Note that the employee may work while Social Security number application is being processed, but only after meeting with the UNCG Tax Compliance Office.

When Nonresident Aliens are approved for employment, the employee must schedule an appointment with John Kirkman, Payroll Tax Manager, 334-5180. The purpose of this meeting is to review the NRA’s tax status and to finalize the completion of required tax documents.

Since most of the tax documents are completed and filed for a specific calendar year, all NRA employees are requested to schedule an appointment with the Tax Compliance Officer each year, in December. The purpose for this meeting is to review any changes in the tax status of the employee and to complete tax forms necessary for the new calendar year.

NRA employees are subject to Social Security Tax (FICA TAX). However, they may be exempted from this tax for a specific time period depending upon the visa type they have used to enter the United States. The status of this FICA Tax exemption will be determined during the first appointment with the Tax Compliance Officer and during the meeting each year in December.

Wages paid to foreign employees are subject to Federal and State Income Tax unless exempted by special IRS regulations or a tax treaty between the United States and the specific resident country of the employee. When the NRA meets with the Tax Compliance Officer at the time of employment or in December each year, an analysis will be made to determine his/her tax status and to see if any tax treaty benefits are applicable. At that time, required tax forms and documents will be completed, signed, and filed with the appropriate tax offices.

The NRA should bring the following documents to the scheduled appointment with the Tax Compliance Officer:

  • US Social Security Card
  • Passport
  • I-94 (Departure Record)
  • Visa
  • I-20 (Certificate of Eligibility for Nonimmigrant (F-1) Student), or DS-2019 (Certificate of Eligibility for Exchange Visitor (J-1) Status)
  • Letter of appointment from the department or Graduate School

After the end of the calendar year, the Payroll Department will issue a Form W-2 (Wage and Tax Statement), if applicable, and/or a Form 1042-S (Foreign Person’s U.S. Source Income Subject to Withholding) to the NRA which will report the amount of compensation paid and taxes withheld.

Note
If the NRA is from a country that does not have a tax treaty with the United States, compensation will be subject to the graduated withholding rates and the tax calculated based on his/her Form W-4 and Form NC-4. UNCG will send this withheld tax to the IRS and the North Carolina Department of Revenue. The NRA should complete a Form 1040-NR (U.S. Nonresident Alien Income Tax Return) and a NC Form D-400 (Individual Income Tax Return) at year-end. The Form 1040-NR and Form D-400 will determine if the NRA owes additional tax or is entitled to a refund of previously withheld tax. Contact John Kirkman, 334-5180 for questions concerning U.S. Tax treaties or the forms mentioned above.

Honorarium and Expense Reimbursement Payments to Nonresident Aliens (NRA)
At the time a nonresident guest Lecturer or Researcher is invited to visit UNCG to give speeches, conduct workshops, or participate in seminars, he/she should be informed, by the individual extending the invitation, that certain personal information will be required in order for UNCG to determine what type payment may be made to them.

A Form NRA 001, Foreign Visitor Information Form, should be sent to the visitor so that he/she may provide such information as U.S. Social Security Number or U.S. ITIN (Individual Taxpayer Identification Number); the type visa that will be used to enter the United States; his/her U.S. tax status and tax treaty benefits being requested. The form should be completed and returned immediately to UNCG, with copies of documents as listed at the top of the form.

If the NRA visitor does not have a U.S. Social Security Number or a U.S. ITIN, he/she should use Form W-7 (Application for IRS Individual Taxpayer Identification Number) to apply for the U.S. ITIN. The instructions for completing the form indicate what documents are required and where to send the application.


9-5-6 Rule Regarding Honorarium Payments to Nonresident Alien Visitors on a B-1/B-2 Visa or Visa Waiver
Foreign Visitors present in the United States from a Visa Waiver country or B-1/B-2 Visa, are not permitted to be employed in the United States. Effective October 21, 1998, academic institutions are permitted to pay an individual admitted in B-1/B-2 or Waiver status, “an honorarium payment and associated incidental expenses for an usual academic activity lasting no longer than 9 days at a given institution”. This is contingent on the fact that the alien visitor has not accepted such payments or expenses from more than 5 institutions or organizations in the previous 6 month period. The alien must present a valid visa and Form I-94, Record of Arrival and Departure, as verification of status for such payments to be made. The visitor must also sign a statement attesting that his visit at UNCG will not exceed 9 days and he/she has not received more than 5 honoraria in last 6 months.

If the NRA is to be paid an honorarium, it is subject to 30% tax withholding. However, some countries have a tax treaty with the U.S., which may exempt the honorarium payment from tax withholding. If treaty benefits are to be requested, a Form 8233, Exemption From Withholding On Compensation For Independent (and Certain Dependent) Personal Services Of A Nonresident Alien Individual, should be sent to the visitor. That form needs to be completed and returned, with supporting documents (copy of Social Security card or ITIN card) to UNCG prior to the date of the visit. If the completed Form 8233 is accepted by UNCG, the Tax Compliance Officer is required to send it to the Internal Revenue Service, International Returns section, Bensalem, PA. UNCG must wait at least 10 days after sending the form to the IRS before payment may be processed.

If the NRA enters the United States from a Visa Waiver Country or with TN (Trade NAFTA) status, they must present a copy of their I-94. In some instances they may have to request the I-94 at the port of entry if it is not issued by the immigration officer. At the end of the calendar year, Accounts Payable will issue a Form 1042-S (Foreign Person’s U.S. Source Income Subject to Withholding) to the NRA which will report the total amount of payments paid to the NRA and taxes withheld by UNCG.

Note
If the NRA is from a country that does not have a tax treaty with the United States, a Form 8233 will not be required. The NRA’s payment will be subject to 30% withholding. UNCG will send this withheld tax to the IRS, and the NRA should complete a Form 1040-NR (U.S. Nonresident Alien Income Tax Return) at year-end. The Form 1040-NR will determine if the NRA owes additional tax or is entitled to a refund of previously withheld tax. Contact Brooks Nelson, ext. 6-0384, for questions concerning US Tax treaties or the forms mentioned above.


Reimbursement or Payments for Travel Expenses
The IRS has changed its position relating to the rules for reimbursement or payments for travel expenses of nonresident aliens. Since that time, payments for travel expense made to or on behalf of nonresident alien independent contractors are not subject to tax withholding if the IRS accountable plan rules are used. This means that receipts and other documentation for the expenses must be submitted with the request for reimbursement or payment. (UNCG Form TRV-1, Travel Authorization/Expense Report.)

When the visitor arrives on campus, a copy of his/her visa and I-94 (Departure Record) needs to be sent to Accounts Payable. If the visa and I-94 support the information already received (and the 10 day wait period has expired), payment can be processed to pay the NRA.

Scholarships, Fellowships, and Grants Paid to Nonresident Aliens (NRA)
In general, all amounts paid to Nonresident Aliens in the form of scholarships, fellowships, grants, and financial aid are subject to federal income tax withholding at the rate of 30% unless the payments are exempt from tax under the Internal Revenue Code or a tax treaty. However, payees who are temporarily present in the United States holding F, J, M, or Q visas are subject to withholding at only 14% of the taxable portion of the grant because such individuals are considered to be engaged in a U.S. trade or business.

Those portions of a scholarship, fellowship, or grant which are used to pay tuition, fees, books, supplies, or equipment are not taxable under section 117 of the Internal Revenue Code if the recipient is a candidate for a degree. Any portion of the scholarship, fellowship, or grant over and above the five items mentioned above is taxable. For non-degree candidates, the entire grant is taxable.

Each semester the UNCG Cashier’s Office will notify the NRA if he/she has taxable payments from a scholarship, fellowship, or grant. Also, the amount of tax to be withheld will be shown and posted to the NRA’s student account in the Cashier’s Office. If there are questions regarding the taxable amounts or the tax withheld, the NRA should contact Amy Cook, at (336) 334-5831 or at ancook2@uncg.edu.

Any NRA grantee who claims that part or all of his/her scholarship, fellowship, or grant is exempt from taxation because of a tax treaty must file Form W-8BEN with the UNCG Cashier’s Office. That form may be obtained from the Cashier’s Office or the Payroll Office. Both offices are located in the Mossman Building.

The NRA must have a U.S. Social Security Number or an Individual Taxpayer Identification Number (ITIN). This number is required so that the University can file the required documents with the appropriate office of the Internal Revenue Service and to other taxing authorities such as the North Carolina Department of Revenue. Also, the number must be used by the NRA when filing annual Income Tax Returns.

The taxable portion of a scholarship, fellowship, or grant and any tax withheld will be reported to the NRA on a Form 1042-S following the end of each calendar year. That information will be used by the NRA when filing his/her annual Federal Tax Return (Form 1040-NR).

If there are questions, you may contact:

  • Todd Mitchell | (336) 334-4710 | rtmitche@uncg.edu
  • John Kirkman | (336) 334-5180 | john_kirkman@uncg.edu

In the past there has been much discussion and a lot of confusion about payments being paid to nonresident aliens entering the U.S. using a B-1 or B-2 visa. The following information is given so that users of this guide may have some basic insight as to problems they may have had in the past and to understand that changes are being made to assist in payments of honoraria and travel related expenses to nonresident aliens. In October 1998, the American Competitiveness and Workforce Improvement Act was signed into law making it possible to pay honoraria and travel expense to foreign visitors entering the U.S. using a B-1 or B-2 visa.

The following quotes are taken from the 1999 Edition of Nonresident Alien Tax Compliance : A Guide for Institutions Making Payments to Foreign Students, Scholars, Employees, and Other International Visitors.

Payments Made to Business Visitors (“B-1” Visaholders) and Tourists (“B-2″ Visaholders)


Page 248
” There has been much debate about what amounts may be paid to a foreign guest lecturer for his services. This is an especially troublesome problem when the individual entered the U.S. as either a business visitor on a B-1 visa or as a tourist on a B-2 visa. The INS policy has been that persons entering the U.S. in either B-1 or B-2 status are not permitted to receive compensation (e.g., an honorarium or other payment) for services rendered. A B-1 business visitor may receive payment for incidental expenses, which includes reimbursement for accommodation, meals, and travel expense. A B-2 tourist may not receive any payments, including reimbursement for incidental or travel expenses. These positions of the INS with respect to B-1 and B-2 visaholders are set forth in proposed INS regulations.

In the past, the INS had suggested that the best way to avoid this “incidental expense” and “honorarium” dilemma is to ensure that guest lecturers enter the U.S. as J-1 short-term scholars. The short-term scholar category is a relatively new category, consisting of scholars coming to the U.S. for a period of up to four months to lecture, observe, consult, or participate in seminars, workshops, conferences, study tours, professional meetings, or similar types of educational and professional activities. These scholars are permitted to receive direct compensation (e.g., an honorarium or other payment) and payment or reimbursement of incidental or travel expenses from the sponsoring entity. The key to the use of the short-term scholar category is to identify the scholar and the appropriate J-1 status before the individual enters the U.S. and the service is rendered. This will entail greater coordination of institution officials responsible for inviting guest lecturers and the institution office responsible for issuing visa documentation.”


Page 250
” Clearly, these rules and policies ran counter to the normal practices of the academic world, where honoraria are paid to guest lecturers and high profile researchers to attract them to give speeches, conduct workshops or participate in seminars, thereby enhancing the reputation of the institution. At the urging of the academic institutions and groups representing foreign scholars, Congress has now overturned these confusing rules. Section 431 of the American Competitiveness and Workforce Improvement Act specifies that any alien admitted under section 101(a)(15)(B) of the Immigration and Nationality Act may accept an honorarium payment and associated incidental expenses for “usual academic activity” lasting no more than nine days at any single institution, if the payment is offered by the institution for services conducted for the benefit of the institution. The foreign national may accept such payment only if he or she has not accepted such payment or expenses from more than five institutions during the previous six months.

Although the new provision is effective as of the date of enactment of the law, it raises some interesting questions that may have to be addressed with implementing regulations. As a preliminary matter, it would seem that the new provision allows payments to be made to visitors for business (B-1 visaholders) and visitors for pleasure (B-2 visaholders) alike. This would allow a visiting professor to combine a lecture with a pleasure trip, and use a B-2 visa without foregoing an honorarium and payment for expenses. Since the statutory language is inclusive of both categories, it is doubtful that the INS will be able to narrow this regulation.”

B-1
Business visitors. No work authorization. Eligible to receive reimbursement for travel expenses and per diem.


B-2
Visitors for pleasure. No work authorization. Eligible to receive reimbursement for travel expenses and per diem.


F-1
Students. Work authorized under very limited circumstances.


H-1B
Professionals. Work authorized for the sponsoring employer.


J-1
Exchange visitors including students, scholars, and trainees. Work authorized under certain circumstances.


M-1
Vocational student. Work authorized under certain circumstances.


Q-1
International cultural exchange. Work authorized for the sponsoring employer.


TN
Trade NAFTA. Work authorized for the sponsoring employer.


WB
Waiver of visa for business. No work authorization. Eligible to receive reimbursement for travel expenses and per diem.


WT
Waiver of visa for tourism. No work authorization. Eligible to receive reimbursement for travel expenses and per diem.


Note
There are currently 42 commonly used non-immigrant visas. The above list consists of non-immigrant visas most commonly used at the University.

Income Tax Treaties Currently In Force

  • Australia
  • Austria
  • Barbados
  • Belgium
  • Canada
  • China, People’s Republic of
  • Cyprus
  • Czech Republic
  • Denmark
  • Egypt
  • Finland
  • France
  • Germany
  • Greece
  • Hungary
  • Iceland
  • India
  • Indonesia
  • Ireland
  • Israel
  • Italy
  • Jamaica
  • Japan
  • Kazakhstan
  • South Korea
  • Luxembourg
  • Mexico
  • Morocco
  • Netherlands
  • New Zealand
  • Norway
  • Pakistan
  • Philippines
  • Poland
  • Portugal
  • Romania
  • Russia
  • Slovak Republic
  • South Africa
  • Spain
  • Sweden
  • Switzerland
  • Thailand
  • Trinidad & Tobago
  • Tunisia
  • Turkey
  • U.S.S.R.*
  • United Kingdom

*The U.S.-U.S.S.R. Income Tax Treaty applies to certain members of the Commonwealth of Independent States and Georgia, which includes: Armenia, Azerbaijan, Belarus, Georgia, Kyrgyztan, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. The tax treaty does not apply to the Baltic States of Estonia, Latvia, and Lithuania or to Kazakhstan or Russia.

Visa Waiver Pilot Program Countries*

  • Andorra
  • Argentina
  • Australia
  • Austria
  • Belgium
  • Brunei
  • Denmark
  • Finland
  • France
  • Germany
  • Iceland
  • Ireland, Republic of
  • Italy
  • Japan
  • Liechtenstein
  • Luxembourg
  • Morocco
  • Monaco
  • Netherlands
  • New Zealand
  • Norway
  • San Marino
  • Slovak Republic
  • Spain
  • Switzerland
  • United Kingdom

*Canada is visa exempt.


A nonresident alien is an individual who is not a U. S. citizen and does not hold an Alien Registration Card (commonly called a green card) and who has not met the substantial presence test.

The Immigration and Naturalization Service (INS) issues green cards to aliens who have petitioned for residence status. When an alien receives a green card, he/she has obtained the privilege of residing permanently in the U.S. and is now considered a resident alien. A resident alien has all the privileges of a U.S. citizen with two exceptions: 1) A resident alien does not have the privilege to vote. 2) A resident alien is not permitted to serve on jury. For tax purposes a resident alien is viewed the same as a U.S. citizen.

An alien meets the substantial presence test after being present in the U.S. for 183 days over a three-year period. The three-year period must include the current year and the two years immediately preceding. Any period during which an alien is in exempt status does not count toward the accumulation of 183 days. Exempt status most commonly seen in a university environment would be students or teachers present in the U.S. on an “F”, “J”, “M”, or “Q” visa.

A visa is a stamp on a page in the passport of an alien. The visa allows the passport bearer permission to apply for entry into the U.S. under the conditions specified by the visa type, which the bearer holds.

A visa can be obtained by making a personal appearance before the consular officer assigned to the applicant’s consular district. The applicant must complete Form OF-156 (Application for Non-Immigrant visa). A consular officer may ask for additional information to verify that the applicant is eligible for the non-immigrant visa for which he/she is applying.

Examples of information contained on the visa stamp are as follows:

  • Visa Number
  • Visa Type
  • Issue Date
  • Expiration Date
  • Location of the Issuing Office

An alien who enters the U.S. for a temporary stay, that ends when they have accomplished the purpose of their visit, is considered a non-immigrant. An alien who has been lawfully admitted to the U.S. for permanent residence is an immigrant. The term immigrant is interchangeable with the term permanent resident.

The Treasury and State Department negotiate tax treaties between the United States and foreign countries. Both the President and the Senate must approve a treaty. One main purpose of a treaty is to prevent international double taxation. International double taxation occurs when more than one country taxes the same income. Income tax treaties prevent double taxation by allowing a particular type of income to be taxed by either of the countries involved in the treaty.

Not all countries have a tax treaty with the United States. If a nonresident alien, who is a non employee visitor from a country without a tax treaty, is eligible to receive a payment from the university, the payment is subject to withholding at a rate of 30%. A nonresident alien who is an employee from a country without a tax treaty is subject to the employee graduated tax withholding tables. The tax withholding is calculated based on an employee’s Form W-4 and Form NC-4. See Special Instructions For Nonresident Aliens (Form W-4 and Form NC-4) in the Forms section of this guide.

Each treaty the United States negotiates with a country is unique unto itself. Therefore, a general statement cannot be made that a specific type of income is exempt for all nonresident aliens on campus. If a nonresident alien is eligible to receive income from the university, his/her country of residence must first be determined. Then a review of the tax treaty for that country can be made to determine if the type of income in question is exempt. If the income is exempt from withholding due to a tax treaty, the nonresident alien must complete a Form 8233 to apply for the exemption from withholding.

A nonresident alien completes Form 8233 to apply for a treaty exemption from tax withholding on any income earned in the U.S. Once the University completes the agency part of this form, the Payroll Manager must forward it to the Internal Revenue Service, International Returns Section, Bensalem, PA. The exemption does not become effective until ten days after the Form 8233 is mailed to the IRS.

The University cannot issue a check to the alien until the 10 day waiting period has expired. To issue the check before the expiration of the waiting period, the mandatory 30% will be withheld and sent to the IRS. To recover the withheld taxes, the alien must file a U.S. income tax return.

With few exceptions, all aliens entering the country receive an I-94. The I-94 is an Arrival/Departure Record. The INS keeps the arrival portion. The departure portion is stapled to the passport. The I-94 shows the visa classification, the date of entry, and the length of the stay authorized.

If the alien is from a country without a tax treaty, and the alien is not an employee of the university, the IRS requires the University to withhold the mandatory 30% on any eligible payments. However, if the alien is an employee, tax is withheld using the graduated withholding rates and calculated based on their Form W-4. The University remits the withheld tax to the IRS. The alien must complete a U.S. Tax Return to try to recover these amounts.

Any NRA receiving a payment from the University is required to have an identification number. It does not matter if the NRA is receiving a reimbursement for travel expenses or some type of honorarium. Those who complete a Form 8233 and apply for a tax treaty exemption are required to have an identification number. The Form 8233 asks for the identification number in Part 1 of the form.

If the NRA is eligible to work in the United States, the law requires that the NRA have a social security number for identification. Application for a social security number is done on Form SS-5, which is filed with the Social Security Office.

If the NRA is not eligible to work in the United States, the IRS requires the NRA to apply for an ITIN. To receive an ITIN the alien applies with the IRS. A Form W-7 is completed to apply for the ITIN.

The TN (Trade NAFTA) classification is available to a Canadian or Mexican citizen who seeks to enter the U.S. on a temporary basis to work in a professional-level job under provisions of the North American Free Trade Agreement. The individual must be employed in one of the professions listed in the federal regulation at 8 CFR 214.6 and have at least a baccalaureate degree unless an alternative credential is specified. The list includes university professors and researchers in addition to many other professions.

A calculation of the number of days an individual is physically present in the U.S. over a period of three calendar years, taking into consideration (i) all of the days physically present in the U.S. during the current calendar year, (ii) one-third of all of the days physically present in the U.S. during the first preceding calendar year, and (iii) one-sixth of all the days physically present in the U.S. during the second preceding calendar year. The results of the calculation determine whether the individual will be treated as a resident alien or a nonresident alien for tax purposes. If the result of the substantial presence test equals 183 days or more, the individual will be treated as a resident alien for tax purposes; if the result of the substantial presence test is less than 183 days, the individual will be treated as a nonresident alien for tax purposes.


If you have questions for which you feel the answer would be beneficial for others, please send them to John Kirkman, Payroll Tax Manager. They may be used when this guide is updated in the future.

John Kirkman, Payroll Tax Manager
270 Mossman Building
[P] (336) 334-5180 | [F] (336) 334-3131 | [E] john_kirkman@uncg.edu

Employee Wages
Employee wages are payments for services that an individual performs or carries out for the University as an employee. Services performed by an employee are subject to the direction and control of the University, its faculty, or staff. Employee wages are not the same as payments made to a foreign visitor for independent contractor payments. Employee wages can only be paid to foreign visitors who have been granted an appropriate employment authorization and visa status by the Immigration and Naturalization Service (INS) to allow them to be compensated for services.


Assistantships
Sssistantships at UNCG include graduate research and teaching positions. These positions involve work for compensation, and require inclusion in UNCG’s payroll. To determine the status of INS work authorization, foreign students should check with the UNCG Office of International Student Services and foreign exchange visitors should check with the UNCG Office of International Programs before accepting any such positions.


Federal Insurance Contribution Act (FICA)
FICA is a tax that is assessed against employee wages paid to individuals who are residents for tax purposes. It is a combination of Social Security tax (currently 6.2 percent) and Medicare tax (currently 1.45 percent). This is a separate tax from the federal and state income tax and is used to fund the retirement and medical benefits paid by the Social Security Administration. FICA tax is imposed in equal parts on both the employee and employer with respect to wages paid to individuals working in the U.S. Therefore, unless otherwise exempted, one-half of this tax (7.65% of wages) is withheld from the payments to the individual, while the University pays the other one-half of this tax (also 7.65% of wages).


Department of State (DOS)
The DOS, operating through U. S. Consulates and Embassies outside the U. S., has the exclusive authority to issue visas. Visas do not guarantee admission to the U. S., but only allow one to present himself/herself to the INS for physical entry to the U. S. Entry will be granted if INS finds that the person’s intent conforms to the visa, i. e., a person with a tourist visa is not actually intending to go to school or work.


Immigration and Naturalization Service (INS)
The INS, a part of the Department of Justice, is the U. S. Government agency responsible for admitting foreign nationals into the U. S. Upon admission, which usually happens after presenting a visa issued by the DOS, INS issues foreign nationals status in the nonimmigrant category in which they seek entry and for which they qualify.


Independent Contractor Payments
Independent contractor payments are for services performed by foreign visitors which may be outside the scope of employment. Independent contractors are not the same as employees. Services that are treated as independent contractor payments must have all of the following characteristics:

  • the foreign visitor must not be under the direction or control of the University, its faculty, or staff, in regard to the means and method that are being used to perform services for the University;
  • the services or tasks being performed are of short duration and will not result in the foreign visitor entering a long-term working relationship with the University;
  • a written contract or agreement exists that identifies the services that are to be performed.

Independent contractor payments can only be received by foreign visitors whose status allows the receipt of such payments as a matter of law. If the independent contractor is known to be a foreign national, special care should be taken to make certain that the individual is truly an independent contractor. No other review needs to be made by the U. S.; the responsibility to accept and report independent contractor payments rests solely on the contractee.


Internal Revenue Service (IRS)
The IRS is the U. S. Government agency that collects taxes. To make this process easier, the IRS issues various forms (withholding allowance certificates, income tax returns, etc.) which are used to help foreign visitors pay the taxes that apply to them. The IRS is also the part of the U. S. Government that determines how much you owe in taxes, and whether an organization that pays income to a foreign visitor is required to withhold specific amounts from that income.


Immigrant (Resident Alien for Immigration Purposes)
An immigrant, or resident alien for immigration purposes, is a “green card” holder and is often referred to as a Permanent Resident (PR), the term which we will use in this guide. A PR is a non-U. S. citizen who has been authorized to live and work in the U. S. indefinitely. It is also a status which one must hold before being eligible to apply for U.S. Citizenship.


Nonimmigrant (Nonresident Alien for Immigration Purposes)
A nonimmigrant, or nonresident for immigration purposes, is a person who is not a citizen or a PR of the U. S. and has been admitted to the U. S. under one of the nonimmigrant categories for a temporary stay that will end when the purpose of that stay has been met.


Nonresident (for Tax Purposes)
A nonresident for tax purposes is a person who is not a U. S. citizen and who does not meet either the “green card” test (See Page 10) or the “substantial presence” test (See Page 12) described in Publication 519, U. S. Tax Guide for Aliens.


Resident (for Tax Purposes)
A resident for tax purposes is a person who is not a U. S. citizen and who meets either the “green card” test or the “substantial presence” test described in Publication 519, U. S. Tax Guide for Aliens.


Taxable Income
Any money paid to a foreign visitor or paid to a third party on their behalf on which taxes are required to be paid to the U. S. Government is called taxable income. Employee wages and stipend payments are considered taxable income. State and federal income tax will be withheld by UNCG from these payments at the appropriate rate.


Travel (Transportation, Meals, and Lodging in Transit)
Travel payments can be made to foreign visitors in payment for, or reimbursement of, a number of travel-related expenses including the cost of meals, lodging, and transportation costs such as air fare and automobile rental, and other related expenses incurred while in transit. There is no distinction between amounts paid directly to travel service providers, such as airlines, and payments made directly to the foreign visitor.


Withholding
Withholding means that the taxes a foreign visitor is obligated to pay to the U. S. Government will be taken out of the paycheck or stipend check by UNCG, then sent to the U. S. Government, as required by law.

Helpful Contacts

  • Social Security Administration
    6005 Landmark Center Blvd.
    Greensboro, NC 27407
    [P] (336) 854-1809 or 1-800-772-1213
  • Internal Revenue Service
    320 Federal Place
    Greensboro, NC 27401
    [P] (336) 378-2026 or 1-800-829-1040
  • NC Department of Revenue
    Koger Business Park
    5 Centerview Drive, Lenor Building, Suite 100
    Greensboro, NC 27407
    [P] (336) 315-7001
  • John C. Kirkman, UNCG Payroll Tax Manager
    270 Mossman Building, PO Box 26170
    Greensboro, NC 27402-6170
    [P] (336) 334-5180 | [F] (336) 334-3131 | [E] john_kirkman@uncg.edu
  • Norma Velazquez, International Programs
    207 Foust Building
    Greensboro, NC 27402
    [P] (336) 334-5404 | [F] (336) 334-5406 | [E] nivelazq@uncg.edu
  • Todd Mitchell, UNCG Cashiers Office
    151 Mossman Building
    Greensboro, NC 27403
    [P] (336) 334-4710 | [F] (336) 334-4178 | [E] rtmitche@uncg.edu

Additional Help

Special Instructions on Forms for Nonresident Aliens

Special Instructions for Form W-4
A nonresident alien subject to wage withholding must give the employer a completed Form W-4 to enable the employer to figure how much income tax to withhold. In completing the form, non resident aliens should use the following instructions instead of the instructions on Form W-4.

  1. Check only “Single” marital status on line 3 (regardless of actual marital status).
  2. Claim only one withholding allowance on line 5, unless a resident of Canada, Mexico, Japan, or South Korea, or a U. S. national.
  3. Request that additional tax of $7.60 per week be withheld on line 6. If the pay period is two weeks, request that $15.30 be withheld instead. (Since UNCG pays monthly, not weekly, the additional tax amount to be entered on line 6 is $33.00.)
  4. Do not claim “Exempt” withholding status on line 7.

These instructions restrict a nonresident alien’s filing status, generally limit the number of allowable exemptions, and require additional tax to be withheld because a nonresident alien cannot claim the standard deduction.


Students and business apprentices from India

Students and business apprentices who are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty can claim additional withholding allowances on line 5 for the standard deduction and their spouses. They can claim an additional withholding allowance for each dependent not admitted to the United States on F-2, J-2, or M-2 visas. Also, they do not have to request additional withholding on line 6.

(Note: The above Special Instructions are taken from IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Corporations.)


Instructions for Form NC-4.
NRAs complete Form NC-4 the same as a US citizen or resident of the State of North Carolina. There are no “Special Withholding Rules” for NRAs in North Carolina.


For Your Information
If a nonresident alien employee does not complete and give a Form W-4 to the employer, the withholding tax will be calculated as if the employee is “Single” with “0” withholding allowances. Also, a nonresident alien employee may elect to complete the Form W-4 as “Single” and claim “0” withholding allowances instead of using the Special Instructions above. The Form W-4 must be completed using one of these two options. There are no other options or exceptions other than the exceptions listed in 2) above and the students and business apprentices from India.