University Payroll Office
Tax-Withholding--Nonresident Alien Teacher/Researcher

A. Purpose

The purpose of this Statement is to provide procedures in the completion of tax withholding forms for nonresident alien employees who are visiting EPA teachers/researchers (visiting scholars).

B. General Guidelines/Applicable Policies

1. Determination of Tax Status

Complete Form PYRL09 Alien Information Request Form, providing information necessary for determination of residence status for tax withholding. This form must be completed by all aliens before beginning work at North Carolina State University. See Part C1 below for instructions.

a. If the alien determines that he is a resident alien for tax purposes, refer to Section G, Statement 10A.

b. If the alien determines that he is a nonresident alien for tax purposes, refer to the following statements for tax withholding instructions:


Honorarium Payments - see Section G, Statement 10B
Teacher/Researcher - see Section G, Statement 12
Students - see Section G, Statement 13.

2. Social Security Tax Withholding

Nonresident alien employees on F-1 or J-1 visas are not subject to social security tax withholding. Nonresident alien employees holding J-2, H-1B, H-4, TN or TC-1 visas are subject to social security tax withholding unless they meet the criteria for student employee exemption outlined in Statement 11 of this section.

3. Federal and State Income Tax Withholding

Nonresident aliens generally are required to file a U.S. Nonresident Income Tax Return (Form 1040NR) with the Internal Revenue Service and a North Carolina Individual Income Tax Return (D-400) with the State Department of Revenue by April 15 of the following year. Employees should be instructed to call the IRS or the N.C. Department of Revenue for assistance.

The University Payroll Office issues by January 31 of each year IRS Form W-2 to employees with taxable income and by March 15 IRS Form 1042S to employees with nontaxable income. These forms are to be used in completing the income tax withholding forms 1040NR and D-400.

a. Employees From Tax Treaty Countries

Nonresident alien employees who are from countries with relevant tax treaties will use Form 8233 and a treaty statement to claim exemption from federal and state income tax due to the tax treaty (in lieu of Forms W-4 and NC-4). See the listing of relevant tax treaty countries for teachers/researchers at the end of this Statement.

The treaty statements are specific for each country and provisions may vary for each category of payment. Because of the magnitude of forms needed (one for each tax treaty country), partially completed forms by country have not been included in this manual. Tax forms for new visiting scholars normally are completed in an orientation session performed in the University Benefits Office. A complete set of forms or the forms for a specific country may be obtained from the University Payroll Office, 515-4370.

The claim for exemption from federal income tax and North Carolina income tax must be renewed each calendar year.

b. Employees Not From Tax Treaty Countries

Federal Tax Withholding: The Internal Revenue Service restricts the withholding status of nonresident aliens not covered by an income tax treaty. These employees will complete federal Form W-4 using the instructions in Section G, Statement 12, Part C4.

State Tax Withholding: The North Carolina Department of Revenue follows federal tax guidelines for nonresident aliens. These employees will complete state Form NC-4 using the instructions found in Section G, Statement 12, Part C4.

1. PYRL09 Alien Information Request Form

All aliens must complete Form PYRL09 "Alien Information Request Form" to establish correct visa information and to determine residence status for tax withholding.

a. General Information
1. Indicate if this is a new or revised form.

2. Enter employee name.

3. Fill in social security number.

4. Enter University department.

b. Citizenship and Visa Information
5. Enter country of citizenship.

6. Enter country of residence.

7. Enter visa type from I-94 card.

8. Enter visa number from top of visa stamp in passport.

9. Enter country issuing passport.

10. Enter passport number.

11. Complete date entered United States.

12. Enter expiration date on I-94 card.

13. Indicate if this is the first visit to United States.

14. If not first visit, indicate previous visa type.

15. Enter intended length of stay in United States.

16. Indicate if employee is candidate for NCSU degree.

c. Determination of Residence Status For Federal Tax Withholding
17. Complete Test 1.

18. Complete Test 2, if applicable.

19. Complete Test 3, if applicable.

20. Complete Test 4, if applicable.

21. Enter Test Results. This section must be completed.

d. Address Information
22. Enter street address while in United States.

23. Enter street address in country of residence.

e. Certification of Information Provided on Form
24. Sign and date the form.

2. Social Security Tax Withholding

The nonresident alien's visa type must be coded on the appropriate personnel action through PICS, and this entry will determine if the employee is subject to social security tax withholding based upon the visa type. If the alien's visa type changes at any time during the alien's stay, the department must process a new personnel action immediately. Failure to report changes in visa status may result in penalties levied by the federal government. Such penalties will be charged to the employing department.

3. Employees From Tax Treaty Countries

Check the list of countries with which the U.S. has tax treaties covering teachers and/or researchers (visiting scholars) at the end of this Statement. If the visitor is a resident of a tax treaty country, have him read the Official Attachment for that country.

a. Attachment to Form 8233

If the visitor agrees with all the terms of the Attachment, have him complete the Attachment. Be sure that the visitor understands that all conditions on the form must be true to be eligible for the tax treaty exemption.

1. Social Security Number - Enter social security number. Nonresident aliens must have a valid United States social security number or must provide a receipt from the Social Security Administration that an application has been made.

2. Name - Enter name.

3. Address in Home Country - Enter permanent foreign address (in country of legal residence).

4. Current Visa Information- Enter the type, issue date, and expiration date of current visa.

5. Date of Arrival - Enter the U.S. arrival date specified from the passport.

6. Signature - The visiting scholar should sign and date the form.

b. Form 8233

Have the visitor complete the Form 8233. Be sure that the form being used stipulates "TEACHER/RESEARCHER" and the correct country of residence. See pages 13 and 14.

1. Name - Enter visitor's name.

2. Address - Enter the visitor's temporary address while living in the United States.

3. Social Security Number - Enter visitor's social security number. Nonresident aliens must have a valid United States social security number or must provide a receipt from the Social Security Administration that an application has been made.

4. Visa Number - Enter the visitor's visa number appearing at the top of the U.S. visa stamp in the passport.

5. Passport Number - Enter the passport number appearing at the front of the visitor's passport.

6. Permanent Foreign Address - Enter the visitor's permanent foreign address in the country of legal residence.

7. Job Description - Circle the appropriate job description.

8. Amount of Earnings this Calendar Year - Enter the total anticipated NCSU earnings for the year. This is the amount which will be exempt from federal and North Carolina tax for the calendar year.

9. Visitor Signature - Visitor should sign and record date of signature.

c. The Attachment and Form 8233 must be submitted to the IRS and the N.C. Department of Revenue by the Payroll Office at least ten days prior to any payments made to the employee.

d. If the visitor does not agree to the statements in the Attachment, or he has exceeded the period covered by the treaty, he should complete Form W-4 and Form NC-4, following the instructions for nonresident aliens not from tax treaty countries in Section G, Statement 12, Part C4 of this manual.

4. Employees Not From Tax Treaty Countries
a. Federal Tax Withholding Form W-4

Because of the restrictions on a nonresident's filing status, the limited number of personal exemptions a nonresident is allowed, and the fact that a nonresident alien cannot claim the "standard deduction," the Form W-4 must be completed using the following instructions taken from Internal Revenue Service Publication 519, U.S. Tax Guide For Aliens:

1. Check only "SINGLE" marital status on line 3 (regardless of actual marital status).

2. Claim only ONE withholding allowance on line 5, unless you are a resident of Canada, Mexico, Japan, or the Republic of Korea, or a U.S. national. Residents of these five countries may claim withholding allowances using the same rules as U.S. citizens (complete the Personal Allowance Worksheet to determine allowances).

3. In addition to following these instructions, you must request that your employer withhold an additional amount of $4.00 per week (on line 6 of Form W-4). If your wages are paid based on a biweekly payroll, the additional amount will be $8.00. If your wages are paid on a monthly payroll, the additional amount will be $16.00.

4. Do NOT claim "EXEMPT" withholding status on line 7.

b. State Tax Withholding Form NC-4

Nonresident aliens not from tax treaty countries use Form NC-4 for state income tax withholding. You should claim the same marital and withholding status for state income tax withholding as you did for federal tax. Please note that Head of Household marital status means that you are single with a dependent child.

Departments should keep on hand a supply of blank copies of Form PYRL09. For a copy of this form, email Wendy Griffin.

Form 8233, the country-specific Official Attachment, Form W-4, and Form NC-4, may be obtained from the University Payroll Office, 515-4370.

                                        

                    U.S. TAX TREATIES COVERING
               COMPENSATION TO TEACHERS/RESEARCHERS


     COUNTRY             MAXIMUM        MAXIMUM        TAX
     OF                  PRESENCE       AMOUNT         TREATY
     RESIDENCE           IN U.S.        EXEMPT         ARTICLE
                         (YEARS)

                                                                   
     Austria                  2              No Limit       XII
     Belgium                  2              No Limit       20
     PR China                 3              No Limit       19
     C.I.S. **                2              No Limit       VI(1)
     Czech Republic           2              No Limit       21
     Denmark                  2              No Limit       XIV
     Egypt                    2              No Limit       22
     France                   2              No Limit       17
     Germany                  2              No Limit       20(1)
     Greece                   3              No Limit       XII
     Hungary                  2              No Limit       17
     Iceland                  2              No Limit       21
     India                    2              No Limit       22
     Indonesia                2              No Limit       20
     Ireland                  2              No Limit       XVIII
     Israel                   2              No Limit       23
     Italy                    2              No Limit       20
     Jamaica                  2              No Limit       22
     Japan                    2              No Limit       19
     Korea, Rep. of (South)   2              No Limit       20
     Luxembourg               2              No Limit       XIII
     Netherlands              2              No Limit       XVII
     Norway                   2              No Limit       15
     Pakistan                 2              No Limit       XII
     Philippines              2              No Limit       21
     Poland                   2              No Limit       17
*    Portugal                 2              No Limit       22
     Romania                  2              No Limit       19
     Slovak Republic          2              No Limit       21
     Sweden                   2              No Limit       XII(3)
     Switzerland              2              No Limit       XII
     Trinidad & Tobago        2              No Limit       18
     United Kingdom           2              No Limit       20


**   C.I.S. -  Commonwealth of Independent States include Armenia, Azerbaijan, Belarus,
Georgia, *Kazakhstan, *Kyrgy Republic, Moldova, Tajikistan, Turkmenistan, Ukraine, Uzbekistan. 

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