SECTION VI COMMONLY ASKED QUESTIONS CONCERNING NON-RESIDENT ALIEN?

PART A. WHO IS A NON-RESIDENT ALIEN?

A non-resident alien is an individual who is not a U.S. citizen and does not hold an Alien Registration Card (commonly called a green card) or 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 a 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 for students or teachers present in the U. S. on an "F." "J." "M," or "Q" Visa.

 

PART B. WHAT IS A 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 satisfy himself 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:

 

PART C: WHAT ARE COMMON TYPES OF VISA'S?

The most important piece of information on a NRA's visa, from the University's perspective, would be the visa type. It is the visa type that gives us the information we need to decide what the law allows us to pay a NRA.

The following is a list of common visa types we could expect to see at the University:

B1 The status of this visa is Visitor for Business. An alien entering the U. S. with this status is here to participate in scientific, educational, professional or business conventions/conferences or to undertake independent research. B 1 visitors for business may not accept full or temporary employment, which a U. S. institution pays. Aliens in this status may receive travel expense reimbursements or per diem payments only. This would include payments made to a third party, on behalf of the alien, for travel expenses. Examples of third party payments would be payments to a hotel or an airline.

An individual on a B 1 visa is not eligible for any type of honorarium, participation fee or colloquium fees.

B2 The status of this visa is Visitor for Pleasure. Aliens receiving this type of visa are visiting the U. S. for activities of a recreational nature, such as tourism, visiting friends or medical treatment. The law does not permit aliens in B2 status to accept employment. Aliens in this status are not eligible to receive any type of compensation or travel reimbursement.

B1/B2 The status of this visa is Visitor for Business and. An alien who visits the U. S. for both business and pleasure receives this type of visa. The immigration officer at the port of entry will make the designation of B1 or B2 status or both on the I-94. Aliens with a B1 designation may receive travel expense reimbursements or per diem payments only. This would include payments made to a third party, on behalf of the alien, for travel expenses. Examples of third party payments would be payments to a hotel or an airline. An individual on a B1 visa is not eligible for any type of honorarium, participation fee or colloquium fees.

Aliens with a B2 designation are not eligible for any type of payments or reimbursements.

Note: Please advise any potential visitors traveling on a B1/B2 visa to request a B1 designation on their I-94 when they enter the county.

WB The status of this visa is Business Visa Waiver Program. Aliens in this status have the same restrictions as those in a B1 status. Aliens in this status may receive travel expense reimbursements or per diem payments only. This would include payments made to a third party, on behalf of the alien, for travel expenses. Examples of third party payments would be payments to a hotel or an airline.

An individual on a WB visa is not eligible for any type of honorarium, participation fee or colloquium fees.

WT The status of this visa is Tourist Visa Waiver Program. Aliens in this status have the same restrictions as those in a B2 status. Aliens in this status are not eligible to receive any type of compensation or travel reimbursement.

F1 The status of this visa is Student. The F 1 student may accept employment on campus, provided the student is enrolled in a full course of study. Income received by an alien in F 1 status is subject to federal and state taxes but exempt from social security for five years.  Under Federal Regulations (8 CFR Part 214) Employment of an F-1 student is not to exceed 20 hours a week while school is in session.

H-1B The status of this visa is Temporary Worker and Trainees. The H-1B visa may be granted to a person who will perform services in specialty occupations. This classification is appropriate for faculty members and researchers. Income received by an alien in H-1B status is subject to Federal, State and FICA taxes.

J1 The status of this visa is Exchange Visitor. An alien, who is in this classification, must be sponsored by an accredited educational institution. The alien's purpose in being in the U.S. would be as a student or teacher. Income received by an alien in this J1 status is subject to federal and state taxes. A J1 Teacher is exempt from social security for two years. A J1 student is exempt from social security for five years.

 

PART D. WHAT IS THE DIFFERENCE BETWEEN AN IMMIGRANT AND NON-IMMIGRANT?

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.

PART E. ARE TRAVEL REIMBURSEMENTS SUBJECT TO WITHHOLDING?

Yes, unless exempted by treaty. Any payments made to an alien including travel reimbursements, honorariums, participation fees, or per diem must be evaluated for tax withholding. Generally, these payments are subject to withholding at a rate of 30%. If the alien is from a country that has a tax treaty with the U.S., the payment the NRA receives may not be subject to withholding. The articles of the tax treaty determine if the payment is exempt from withholding.

PART F. WHAT IS A TAX TREATY?

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 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%.

Each treaty the United States negotiates with a country is unique unto itself. Therefore, we cannot make a general statement that a specific type of income is exempt for all visitors on campus. If a visitor is eligible to receive income from the university, we must first determine the NRA's country of residence. Then we can review the tax treaty for that country and determine if the type of income in question is exempt. If a visitor's income is exempt from withholding due to a tax treaty, the NRA must complete a Form 8233 to apply for the exemption from withholding.

PART G. WHAT IS A FORM 8233?

A non-resident alien completes Form 8233 to apply for an exemption from withholding on any income earned in the U. S. Once the university completes the agency part of this form, it is forwarded to the IRS. The Form 8233 is a means to apply for exemption from withholding. The exemption does not become effective until ten days after we mail the Form 8233 to the IRS.

The university cannot issue a check to the alien, without withholding the mandatory 30%, until the waiting period has expired. To issue the check before the expiration of the waiting period, the 30% will be withheld and sent to the IRS. To recover the withheld taxes, the alien must file a U.S. income tax return.

Note: The IRS is considering lengthening the wait time from ten to twenty days.

PART H. WHAT IS A FORM I-94?

With few exceptions, all aliens entering the country receive the 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.

PART I. WHAT IF AN ALIEN IS FROM A COUNTRY WITHOUT A TAX TREATY?

If the alien is from a country without a tax treaty, the IRS requires that the university withhold the mandatory 30% on any eligible payments. This would include any payments made to a third party, such as an airline or hotel. The university remits the withholding to the IRS. The alien must complete a tax return to try to recover these amounts.

PART J. WHO NEEDS AN IDENTIFICATION NUMBER?

Any alien 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. Even 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 alien 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 alien is not eligible to work in the United States, the IRS requires the alien 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 IRS requires that the alien have an identification number before we can make a payment.