NONRESIDENT ALIEN TAXATION AT THE UNIVERSITY OF CALIFORNIA, RIVERSIDE
Federal Regulations require us to determine the tax status of Nonresident Aliens who will receive wages from the University of California, Riverside. The Internal Revenue Service (IRS) regulations regarding the taxation and reporting of wages made to Nonresident Aliens are very complex; therefore, we are using an external software - Glacier to assist in making this determination.
GLACIER is a secure online tax compliance system designed to allow Nonresident Aliens to provide UCR with their immigrant and tax data efficiently and effectively so that tax residency and income tax treaty determinations can be made. The IRS requires all nonresident aliens who receive U.S. source income to furnish the University with a Social Security Number (SSN).
GLACIER Process:
Departmental Responsibilities:
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If the employee checks box 4 "An alien authorized to work (Alien # or Admission #) " of Section 1 of the I-9 Form, the GLACIER notification sheet needs to be given to them.
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During the new hire process, the following data needs to be updated:
Nonresident Alien responsibilities:
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Log into GLACIER and enter information within ten (10) days of receipt of the email from support@online-tax.net. ( this is not spam)
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Print, review, sign and date all forms (Tax Summary Report, etc) created by Glacier
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Forward signed forms with the required document copies as instructed on the Tax Summary Report to:
Elena Mateos
University of California, Riverside
Payroll Office-002
Riverside, CA 92521
Telephone: 951-827-1958
Elena.mateos@ucr.edu
Central Payroll Office responsibilities:
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Review and ensure that all documents are accurate and complete
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Maintain GLACIER and update EDB for tax purposes
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Coordinate year-end tax reports (1042-S)
GENERAL GUIDELINES
For Federal Income tax purposes, non-citizens of the United States are classified by the Internal Revenue Service (IRS) as either RESIDENT or NONRESIDENT aliens. Non-citizens of the United States are required to have a valid VISA classification before payments are made. The IRS tax code maintains two different withholding requirements for resident and non-resident aliens. Before a non-citizen of the United States is paid as an employee (wages), or non-employee (honoraria, scholarships and fellowship grants); residency status has to be determined. The IRS has two tests for residency status: the "green card" test and the "substantial presence" test.
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SUBSTANTIAL PRESENCE TEST **
Non-citizen must be physically present in the United States on at least:
1) 31 days during the current calendar year, and
2) 183 days during the current year and the 2 preceding years, calculated as follows:
a) All days in current year plus
b) 1/3 of days in first preceding year plus
c) 1/6 of days in second preceding year
**EXCEPTION
You generally DO NOT COUNT days the non-citizen is in the United States as
1) F, J, M or Q visa student for five (5) years.
2) F, J, M or Q visa teacher/researcher for two (2) years.
A nonresident alien individual married to either a U.S. citizen or resident alien may choose to be treated as a resident alien for income tax purposes. Wages paid to these individuals are subject to the withholding rules that apply to U.S. citizens and residents.
FEDERAL TAXES
Federal taxes are generally deducted at the rate of single status with one allowance.
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Persons from Canada, Mexico, or South Korea: Per special agreements with the United States, persons from these countries are deducted at a single marital rate but may claim an additional allowance for each dependent (Note: Japan has been removed from this category effective 1/1/2006).
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Students from India: Indian students may only claim additional withholding allowance for their spouse and
dependents not admitted to the United States on F-2, J-2, or M-2 visas. This article does not
allow an exemption from withholding or the payment of tax; the article only offers additional
withholding allowances and/or deductions. Please note that the ability to claim additional withholding allowances is limited to student employees from India. It does not apply to teachers or researchers from India. Teachers
or researchers must use Article 22 of the U.S. – India Income Tax Treaty if eligible.
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Persons exempt under a TAX TREATY between their country and the United States. For the current list of tax treaty countries, click the following: (a)STUDENTS (b) TEACHERS/RESEARCHERS. In addition to the form UCW-8BEN and form UCW-4NR/DE4, employees exempt under a tax treaty must also complete and submit the following forms:
Note: All applicable forms are obtained after the completion of the required fields from the Glacier software.
Social Security (OASDI) and Medicare
Nonresident aliens holding F-1 or J-1 visas are exempt from Social Security and Medicare taxes. Aliens with other visa types employed by UCR are subject to Social Security and Medicare taxes. Career employees pay Social Security and Medicare taxes. Non-career (casuals) employees pay Defined Contribution Plan (DCP-casual) in lieu of Social security plus Medicare tax. Individuals who have established residency under the substantial presence test are also subject to Social Security and Medicare taxes.
STATE TAX
The California Franchise Tax Board does not make a distinction between foreign individuals and U.S. citizens when it comes to withholding. Nonresident aliens are subject to the same state tax withholding rules as citizens. No one from the Payroll Office can advise an employee on the number of exemptions to claim on their UC W-4/DE 4. Individuals must seek advise from someone who is licensed to prepare taxes, or use the worksheet that is in the UC W-4/DE 4 packet.
Nonresident Alien Employee's Federal-State Withholding Allowance Certificate (UC W-4NR/DE4)
DOCUMENTS ISSUED AT THE END OF THE CALENDAR YEAR
All foreign individuals receiving U.S. source income are required to file income tax returns. Income type and residency status will determine which type of income statement the individual will receive. They also determine the type of income tax returns that need to be filed. It is recommended that individuals consult a licensed tax preparer or the Internal Revenue Service (IRS).
EMPLOYEES - No tax treaty exemption - Will receive a W-2 for federal and state taxes. Individuals should file a 1040NR for federal tax and the appropriate state form depending on state residency status.
EMPLOYEES - Exempt under a tax treaty - Will receive 1042S for federal tax and W-2 for state tax. Individuals should file a 1040NR for federal and the appropriate state form depending on state residency status.
Where to find information
IRS - International Taxpayer
IRS publication 515, Withholding of Tax on Nonresident Aliens and Foreign Corporations
IRS publication 519, U.S. Tax Guide for Aliens
Certificate of Foreign Status for Federal Tax Withholding (UC W-8BEN)
Fill-in Form, Instructions and Frequently Asked Questions (Adobe PDF) |