Non-Resident Aliens

By definition, an "alien" is an individual who is not a U.S. citizen. Aliens are classified as non-resident or resident aliens by the Bureau of Citizenship and Immigration Services.

Resident Alien

Resident aliens generally are taxed on their worldwide income, similar to U.S. citizens. To be classified as a resident alien, the individual must meet one of two tests:

Green Card Test
A non-resident alien is a lawful permanent resident of the U.S. at any time if they have been given the privilege, according to the immigration laws, of residing permanently as an immigrant. This status usually exists if the Bureau of Citizenship and Immigration Services has issued a green card.

Substantial Presence Test
A non-resident alien is classified as a resident alien for tax purposes if they were physically present in the U.S. for 31 days during the current year and 183 days during a three-year period that includes the current year and the two years immediately before that.

Non-Resident Alien

If a person does not meet either the Green Card or Substantial Presence Test, then that person is classified as a non-resident alien. A new arrival on a J-1 or F-1 visa is generally a non-resident alien. Non-resident aliens are taxed only on their income from sources within the U.S. and on certain income connected with the conduct of a trade or business in the U.S.

General Information Regarding the Taxation of Non-resident Aliens
Non-resident aliens are taxed on earnings received while living in the U.S. Non-resident aliens (visa type F-1 and J-1) may be exempt from FICA (Social Security tax). If the visa type is F-1 or J-1, the non-resident alien may be exempt from federal taxes only if the country of residence has negotiated an income tax treaty which covers the type of payment received while visiting the U.S. For additional information and guidance on requesting payments to NRA's, please see Payments to Non-Resident Aliens.

In order to make this determination, all non-resident alien payees are required to provide immigration information to the Payroll Office via Sprintax Calculus.

It is the responsibility of the hiring department and/or employee to notify the Payroll Office if they are in the US on a qualifying visa to ensure they receive the proper tax treatment. All NRA payment requests must include a completed Tax Analysis for the year in which the payment will be processed.

The Payroll Office now publishes the Tax Analysis Status Report , updated weekly, to confirm if the payee has completed this process. This report includes a list of all NRA payees (VIMS and WM) and their current analysis status.

Below are the various statuses and required action by the department requesting payment:

Approved/Pending Approval – Do not submit a Request for Tax Analysis – email us directly at foreignnationals@wm.edu.

Additionally, if the payment is to be processed through:

Buy W&M or Payroll, please provide the Banner ID and name of the payee, along with the amount of the payment (if applicable)
Student Financial Aid, please attach the Award spreadsheet to your email

Unprocessed – Do not submit a Request for Tax Analysis - Contact the payee directly to remind them that they must complete the tax analysis process before their payment can be processed.

Payee is Not on the Tax Analysis Status Report - If your payee is not on the Tax Analysis Status Report, it is the responsibility of the department initiating a payment to submit one of the following requests for tax analysis to start the process:

Request for Tax Analysis-NRA PR (payroll/student or non-student positions): when hiring foreign nationals -students, staff, and faculty as a part-time or full-time employees and payments are processed through the Payroll Office. Please submit a request for tax analysis after submitting a PAF/ePAF.
Request for Tax Analysis-NRA SFA (scholarships/fellowships/other): when payments are processed through the Financial Aid Office. Please include the Student Payment Spreadsheet/award letter when requesting a tax analysis as it will route directly to deptaward@wm.edu through DocuSign after tax analysis is completed.
Request for Tax Analysis -NRA AP (awards/honorariums/services/payments to students awarded summer scholarships/fellowships) - when payments are processed through the Accounts Payable Department/buyW&M. Please include the detailed explanation of the payment including if the payment is for an individual or a foreign entity when requesting a tax analysis.

If the tax analysis has been previously completed, the departments are not required to submit another tax analysis request during the same calendar year. Instead, departments should send us payment information by email to foreignnationals@wm.edu

Once the request is received, the payee will be contacted with login information for the Calculus system where they can submit the data required to complete the tax analysis process.

Failure to complete and submit the required forms may result in Federal and State taxes being withheld from the employee’s paycheck. Refund of these taxes can be obtained by filing Form 1040NR after Form W-2 is issued. WM cannot refund taxes withheld due to failure to submit required documentation.

NRA Payment Overview

There are three ways in which payments are made to foreign nationals:

As an employee via the Payroll process, student or non-student positions
As a student recipient of a scholarship or fellowship via Accounts Payable or Student Financial Aid
As a contractor via Accounts Payable

Process Overview

There are three parts to the tax analysis process for foreign nationals:

Completing paperwork with the department (depends on the type of activity: payroll, accounts payable, financial aid),
Completing data online in Calculus
Uploading signed documents to Calculus for the application of treaty benefits

All processes must be completed before treaty benefits can be applied to ensure that WM complies with Internal Revenue Service (IRS) regulations.

The IRS requires that WM apply U.S. withholding and reporting rules consistent with the U.S. tax status which can be as a Resident alien or Non-Resident alien (NRA). Resident aliens are taxed like U.S. citizens, while NRAs are taxed under different withholding and reporting rules. U.S. tax status depends on the NRA’s U.S. immigration status and U.S. presence. Also, NRAs may be entitled to tax exemptions, applicable tax treaties, or both, depending on their U.S. tax status. Since the immigration actions and U.S. presence may change the way the NRA is taxed, we request that the NRA provide us with up-to-date information so that we may verify their status and any applicable tax exemptions.

Without this information, the NRA care team in the Payroll Office cannot provide the NRA with tax exemptions which might otherwise be applicable.

NRA Payment Processing

The discussion below will highlight three main components of the NRA payment process:

Tax Analysis via Calculus
Tracking of NRA Payments in AP and Financial Aid
Annual Tax Documents

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Tax Analysis via Calculus

A key part of the foreign national process is submitting data via the secure Calculus hosted by Sprintax. Calculus is a cloud-based, data-entry application for foreign national tax compliance and income tax treaty analysis that also prepares IRS tax form 1042-S.

Foreign nationals at WM submit their personal and immigration status data using Calculus. The data is then analyzed to determine tax status and treaty eligibility. Foreign nationals are able to review updates and print reports and completed IRS forms.

Depending on the type of payment, WM departments will submit the appropriate request for tax analysis to initiate the analysis process. The Payroll Office will contact the foreign national via Calculus.

The tax analysis process is outlined below:

Department submits request for tax analysis via
• Request for Tax Analysis- NRA PR
• Request for Tax Analysis-NRA SFA
• Request for Tax Analysis- NRA AP
Student will be contacted by Payroll via Calculus with username and password to enter required information for processing.
Payroll will review NRA responses and follow up via email with any who have NOT completed Calculus. Those who may have errors in their information that could impact the results of their tax analysis will also be contacted.
The tax analysis is completed in real time, and required documents are automatically generated in the system for eSignatures. As soon as the payee completes Calculus, electronically signs the required documents, and uploads the required immigration documents, the tax analysis process is complete. The payee should notify our office that they have completed the necessary steps by emailing us at foreignnationals@wm.edu
Payroll will review the tax analysis and follow up with payees if necessary.
For those claiming treaty benefits, Form 8233 will be faxed to the IRS for approval before benefits can be applied. This process takes 10 business days and must be completed to remain in compliance with Federal regulations.
After approval to apply treaty benefits has been confirmed the Request for Tax Analysis will be finalized and a copy sent to Department. Spreadsheet will be sent to Financial Aid with updated amount to be paid to student. If payment is to be made by AP, the Request for Tax Analysis will be attached to the payment request in buyW&M and submitted for payment to AP.

The Payroll Office will attempt to contact the NRA payee twice. If no response is received after the second attempt, the Payroll Office will complete the tax determination, withholding the maximum allowable tax (14% for scholarships, 30% for services) for any who have failed to respond.
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The foreign national will complete Calculus. Here is what they should expect:
1. Before going to the Calculus website, the NRA should gather the following documents:
  • Passport
  • Entry Visa
  • Admission Record or I-94 card (this is electronic and can be printed at https://i94.cbp.dhs.gov/I94)
  • Social Security Card (if you do not yet have one, you can still complete the data entry)
  • Eligibility Document (I-20, DS-2019, I-797 or employment authorization card)
2. Copies of immigration documents, as well as all other signed tax documents generated for the tax analysis must be uploaded to Calculus.
3. NRA must use the website address, password and username given in the e-mail to enter the site. If this is the first time going to the website, they will be asked to change the password.
4. Log in and complete the questions in as much detail as possible. There are help buttons to assist the NRA if they have any questions. They can save with errors if necessary, but must answer all of the required fields, including the visa information. Step-by-step instructions are available here .
5. Payroll Office will review the data and either approve it or send an e-mail requesting additional information.
6. Once approved, the Request for Tax Analysis will be completed, and Banner records will be updated as needed.

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Tracking of NRA Payments in AP, Financial Aid, and Payroll

Once the data in Calculus is approved and all required tax forms are signed by the NRA; the Payroll Office, will calculate withholding and complete the Request for Tax Analysis providing the tax withholding rate and amount. The Request for Tax Analysis must accompany any payment requests submitted to Financial Aid or Accounts Payable. Because of the nature of this analysis and the complexities brought about by the new vendor create process and the financial aid process, we would like to offer the following guidance to make NRA paperwork and payments process easier for you:

For Accounts Payable Payments:

The individual or company must be setup as a vendor in buyW&M.
To setup the vendor in buyW&M, refer to the Vendor Management section of the buyW&M website: https://www.wm.edu/offices/supplychain/buywm/departments/vendor-management/
Department reviews the Tax Analysis Status Report to determine if the payee has already completed a tax analysis for the current year. If not, department submits the Request For Tax Analysis - NRA AP
Simultaneously submit payment request via buyW&M
Payroll will complete the Calculus process described above with the NRA
Payroll will attach the completed Request for Tax Analysis to the payment in buyW&M and email you a copy for your records
Accounts Payable will process the payment to the NRA
Tax is recorded appropriately through the AP process and is remitted to the IRS on behalf of the NRA payee by Payroll

For Financial Aid Payments:

Department reviews the Tax Analysis Status Report to determine if the payee has already completed a tax analysis for the current year. If not, department submits the Request For Tax Analysis - NRA SFA
Please include the Student Payment Spreadsheet/award letter when requesting a tax analysis as it will be routed directly to deptaward@wm.edu through DocuSign after tax analysis is completed.
Payroll will complete the Calculus process described above with the NRA.
After analysis is made, Payroll will email you with the tax analysis on the payment.
If tax is applicable, the Payroll Office will reduce the amount on the Financial Aid Spreadsheet and submit a DocuSign to Financial Aid for payment.
Payroll will then complete a JV to charge the same index (Chart W) for the tax amount.
Tax is recorded appropriately through the JV process and tax is remitted to the IRS on behalf of the NRA by Payroll.

For Payroll Payments:

Department reviews the Tax Analysis Status Report to determine if the payee has already completed a tax analysis for the current year. If not, department submits the Request for Tax Analysis- NRA PR

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Annual Tax Documents

The Payroll Office will prepare Form 1042-S for all qualifying NRA payments made by the Payroll, Accounts Payable and Financial Aid Offices. The NRA will receive an email alerting them when the documents have been uploaded into Calculus, where they can log in to securely obtain their tax documents.
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The timeliness of this process is solely dependent upon the responsiveness of the NRA payee in completing the Calculus process, and submitting requested documents to the Payroll office. Failure by the NRA to complete the Calculus process may result in tax application on any proposed payment in accordance with IRS regulations.

Honorarium Payments to Foreign Nationals

What Activities Can be Paid Through an Honorarium to an NRA?
An honorarium may be paid to a foreign national for "usual academic activity or activities" conducted for the benefit of William & Mary or Virginia Institute of Marine Science, that comply with the 9-5-6 Honorarium Rule.

Who is Eligible to Receive an Honorarium?
Prior to committing to an honorarium for a foreign national, departments must ensure that the person has the appropriate visa that allows such a payment. For short-term visits made for the purpose of delivering a lecture or speech, only certain visa classifications are authorized to accept an honorarium:

B-1 (Visitor for Business) or B-2 (Visitor for Tourism) provided the individual meets the conditions of the Honorarium Rule.
VWB (Visa Waiver Business) or VWT (Visa Waiver Tourist) provided the individual meets the conditions of the Honorarium Rule.

Honorarium Rule (9/5/6 Rule)
To qualify for an honorarium, foreign nationals must have the proper visa status and adhere to the following criteria and must sign a statement certifying that they fulfill the requirements to receive the honorarium.

For "usual academic activity or activities"
Nine (9) days or less at the University
The individual has accepted such payment from no more than 5 educational or research institutions in the previous 6-month period
Statement to abide by the 9/5/6 Honorarium Rule must be signed and dated by the payee.

It is the responsibilty of the department sponsoring the activity to obtain the signed Statement to Abide by the 9/5/6 Honorarium Rule and to attach it to the Honorarium Payment Request Form in buyW&M.
NOTE: If the event for which the honorarium is offered is arranged before the individual travels to the U.S., the individual must seek admission as a B-1 or VWB non-immigrant. To facilitate the process of sponsoring a visitor for a B-1 or VWB visa, please refer to the instructions provided on Reves Center's web page.

Withholding
Honorarium Payments to Non-Resident Aliens are subject to a 30% Federal Tax withholding unless
specifically exempted by a tax treaty.