Frequently Asked Questions
What does "NRA" mean?
NRA is an acronym for Nonresident Alien.
What is the difference between a Foreign National and a Nonresident Alien?
A Foreign National - is a term used to describe a person who is not a citizen of the host country in which he or she is temporally residing. An individual who is a citizen of any country other than the US. Whether a foreign national is a nonresident or resident alien for tax purposes is determined based on the individual's visa status, purpose of the current visit, length of stay in the US.
A Nonresident Alien (NRA) - is any person who is not a US Citizen, not a lawful permanent resident (green card holder) and does not meet either the Green Card or the Substantial Presence Test. A nonresident alien files a special tax form, pays tax only on US source income, is subject to special rates, and may qualify for treaty exemptions.
Who is a "Nonresident Alien and "Resident Alien" for tax purposes?
If a foreign individual does not meet either the Green Card or Substantial Presence Test, then that individual is classified as a Nonresident Alien. A Nonresident Alien is taxed differently from a U.S. citizen. A Resident Alien also known as a "Permanent Resident" has been awarded a Permanency Authorization to live and work in the US. Permanent Residents are subject to all income tax reporting and taxation.
What is a "W-4"?
The "Employee Withholding Allowance Certificate" is a form to declare your federal tax withholding status. When completing the W-4, NRAs may not claim "Married", NRAs may not claim "Exempt", and NRAs may not claim more than "01" allowance.
See Supplemental Form W-4 Instructions for Nonresident Aliens (IRS Notice 1392) for more information.
If I am exempt per a treaty, why is a W-4 also required?
When the tax treaty provisions expire, Payroll Services will begin taxing you per the W-4 on file.
How often does the Form 8233 need to be filed?
Once a calendar year or if circumstances change. Is there a tax treaty between my country and the US? See IRS Publication 901. For further questions, go to the IRS web site, www.irs.gov.
What is the difference between forms W-2 and 1042-S?
The IRS form W-2 is used to report annual taxable federal and state wages. Treaties for nonresident aliens (NRA) may exempt the employee from federal taxes. If your wages were subject to a treaty exemption, your wages will be reported on a 1042-S.
If you are a NRA and are exempt from federal taxes, then you will receive a form 1042-S. What is a "1042-S"?
A 1042-S Form is a year-end tax document given to a Nonresident Alien who received:
- Wages protected by a tax treaty, or
- Qualified Scholarship
- Non-Qualified Scholarship
In certain cases, you may receive a W-2 Form in addition to a 1042-S Form.
What types of funds are taxable?
Wage payments made to employees who have claimed tax treaty benefits Tax reportable Fellowship/Scholarship income Service payments made to independent contractors for work performed in the U.S. Royalty payments issued to individuals or entities. Non-employee Prize or Award payments
Why am I being taxed on my tuition waiver?
All Graduate tuition and fee waivers are taxable unless exempt under the Internal Revenue Code. Under the University's Educational Assistance Plan that is in compliance with Internal Revenue Code (IRC) §127, up to $5,250 per calendar year in tuition waivers associated with Graduate Assistantships (GAs) or graduate level classes taken by employees are excluded from taxable income. If the amount of the tuition waiver exceeds $5,250 in a calendar year, the University is required to report the excess (any amount over $5,250) as income per the Internal Revenue Service and tax accordingly.
View more tax information about tuition waivers.
What happens to the taxes that are withheld?
If you are using a treaty with available treaty benefits, your amounts will be included on your Form 1042 up to the treaty limit and then your Form W-2 for any non-treaty covered taxable income.
For more information, please refer to Taxation on Graduate Assistant Tuition Waivers.
Why do I see a charge for "NRA" tax on my Student Account?
If the payments you receive are in excess of tuition, fees, supplies required for courses, or book allowance, these are considered taxable expenses. Non-Qualified Scholarship and Fellowship payments are considered tax reportable by the Internal Revenue Service (IRS). These payments may be subject to 14% or 30% federal tax withholding unless a treaty is applied.
If the payment will cover Non-qualified Education Expenses (i.e. room and board, travel or meals), the payment will be subject to 14% federal tax withholding. There is a tax obligation on all financial aid received in excess of tuition and fees. Any tax withholding will appear on your student account.
Where can I find information about nonresident alien taxation?
The Internal Revenue Service (IRS) has produced numerous publications and forms. All of these publications and forms are available at the IRS web site. The publication that may be helpful to nonresident aliens is Publication 519 - United States Tax Guide for Aliens.
What type of income is reported? The IRS requires that both taxable and non-taxable payments made to nonresident aliens be reported on either Form 1042-S (mailed by March 15th) or Form W-2 (mailed by January 31st) of each year.
Why is it important to submit my forms and documents to payroll?
- Prevention of maximum withholding from pay
- More tax home pay
- Ensure accurate taxes are withheld from pay
If you have any questions please contact payroll@wiu.edu, or by phone at 309-298-1867.
Connect with us: