Tax Information For International Visitors
The following notes are a summary of your general tax obligations while you are in the U.S. For a more complete explanation of tax rules for international visitors, consult IRS Publication 519, U.S. Tax Guide for Aliens which can be accessed at http://www.irs.gov.
Residence Status For Tax Purposes
If you are not a U.S. citizen, your U.S. tax obligations depend on your "residence status for tax purposes". The Internal Revenue Service (IRS), the tax-collecting agency of the U.S. government, refers to non-U.S. citizens as "aliens". According to the IRS, you are either a "Resident alien" or a "Nonresident alien" for tax purposes. To determine whether you are a Resident or Nonresident alien follow the instructions on the Determination Of Residence Status For Tax Withholding document.
Resident aliens for tax purposes are taxed, in the U.S., on their worldwide income. Resident aliens claim the same types of tax exemptions and deductions offered to U.S. citizens, and are subject to the same Social Security tax-withholding requirements as U.S. citizens (see "Fica Tax-Withholding").
Nonresident aliens for tax purposes are taxed only on U.S. source income. Taxes on a Nonresident alien's income are assessed according to special rules and regulations. For example, Nonresident aliens may take advantage of tax exemptions due to an income tax treaty (see "Tax Treaty Exemptions").
The process of deducting taxes from payments that we issue to you is called "Income Tax-Withholding". Tax-withholding is required by the IRS. The rules governing how much tax (if any) the University is required to withhold are based on several factors: (1) your residence status for tax purposes, (2) the type of payment you will be receiving from the University -- i.e. wages or scholarships, and (3) information you furnish on tax forms.
Resident Alien Tax-Withholding
- Wage payments (i.e., payments for part-time student employment, salaries of researchers or professors): federal tax is withheld based on the marital status and number of allowances listed on the IRS Form W-4, Employee's Withholding Allowance Certificate. Federal tax rates are graduated, so the amount of tax withheld depends on the amount of the payment.
- Scholarship or fellowship stipends, and other miscellaneous payments: most other types of payments to Resident aliens are not subject to tax-withholding, even though these payments may be subject to taxation. Resident aliens who receive scholarship or fellowship payments should consult IRS Publication 520, Scholarships and Fellowships.
Nonresident Alien Tax-Withholding
- Wage payments: Nonresident alien employees must follow special instructions when completing the IRS Form W-4. Nonresident aliens must list themselves as "SINGLE" (regardless of actual marital status), with "1" allowance, and request an additional amount of federal tax to be withheld from each check. Currently this "additional amount" is $33.10 for employees paid on a monthly pay schedule.
- Scholarship or fellowship stipends, and other miscellaneous payments: scholarship or fellowship stipends paid to Nonresident aliens are subject to a 14% federal tax-withholding rate. Other miscellaneous payments to nonresidents are generally subject to a flat 30% federal tax-withholding rate (however, see "Tax Treaty Exemptions").
In addition to the Federal tax-withholding, the University also withholds state income tax. Colorado state tax is generally withheld at the rate of 5%.
Social Security tax (also know as FICA) is an employment tax. FICA is withheld only from wage payments, and is deducted in two components: Old Age, Survivors, Disability Insurance or OASDI (6.20%) and Medicare (1.45%). FICA taxes will not be withheld from a student's wages when the student is registered and attending classes at the University of Northern Colorado, and works on a part-time basis.
FICA Tax Exemption For Certain Nonresident Aliens: Students who hold F-1 or J-1 classifications are exempt from FICA tax-withholding for the first five calendar years they are in the U.S. Professors and researchers who hold J-1 classification are exempt from FICA tax-withholding for the first two calendar years they are in the U.S. It is the Payroll Department's responsibility to determine which employees should be subject to FICA tax-withholding during a particular calendar year.
Note: the term "calendar year" refers to the period of January 1 through December 31. If you are present in the U.S. during any part of a particular calendar year, that year will count as one calendar year of U.S. presence.
Certain international visitors may be able to claim exemption from U.S. taxes based on a tax treaty agreement between the U.S. and their home country. You should consult IRS Publication 901, U.S. Tax Treaties to see if a treaty between the U.S. and your home country actually exists. If a treaty does exist, you should determine if an article of the treaty covers the type of payment you will be receiving from the University, and if you will be able to meet all the requirements of the treaty. If a tax treaty article does exist, and covers the type of payment you will receive, you may claim the exemption from tax when you file your U.S. income tax return (see "Tax-Filing").
The IRS also allows you to claim tax exemption before the payment is made to you. To claim the exemption from tax-withholding, you must complete and submit the appropriate form to the University of Northern Colorado Tax Accountant. If you wish to claim the exemption from tax-withholding for your wages (i.e. part-time student employment, salaries of researchers or professors, etc.), complete and submit IRS Form 8233, Exemption from Withholding on Compensation for the Independent Personal Services of a Nonresident Alien. If you wish to claim exemption from withholding for scholarship or fellowship stipend payments, complete IRS Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding.
International visitors who hold F-1, J-1 or H-1B classifications (and their spouses and dependent children) must file income tax returns regardless of whether or not they receive wages or scholarships in the United States. "Filing an income tax return" means completing the appropriate forms to report the income (if any) that you received during a particular calendar year. By completing the forms, you determine whether or not you have met your U.S. tax liability (if any) for the calendar year. Generally, for each calendar year you are present in the U.S., you must complete and submit all tax returns by April 15 of the following year. In most cases, you will need to file at least two income tax returns per year, one with the IRS, and one with the tax-collecting agency in the state where you reside. People who live in Colorado file a tax return with the Colorado Department of Revenue. Individuals who resided in states other than Colorado may need to file more than one state income tax return. When Resident aliens file their tax returns, they are permitted to choose ONE of the following forms to complete and submit to IRS: Form 1040, 1040A, or 1040EZ. However, Nonresident aliens are required to complete IRS Form 1040NR, U.S. Nonresident Alien Income Tax Return (plus all applicable attachments).
Tax-Reporting Documents Issued By The University: The University is required to furnish certain tax-reporting documents to you. In most cases you are required to attach these documents to your tax returns. If you were paid wages, and had tax withheld, the Payroll Department will mail you Form W-2, Wage and Tax Statement, by January 31 of the following calendar year. If you are a Nonresident alien, and received income that was exempt from tax-withholding, or subject to a flat withholding rate, the Payroll Department will mail you Form 1042s, Foreign Person's U.S. Source Income Subject to Withholding, by March 15 of the following calendar year. For this reason, it is crucial that you provide the University Payroll Department with the most current address information.
For more information regarding U.S. taxation of international visitors, you should consult the following IRS publications: Publication 513, Tax Information for Visitors; Publication 519, U.S. Tax Guide for Aliens, and Publication 901, U.S. Tax Treaties. International visitors or department administrators may access these publications, as well as IRS forms and instructions, by visiting the IRS web-site at http://www.irs.gov. For assistance in completing the IRS or state income tax returns, please call the local offices of the IRS or Colorado Department of Revenue.
If you have questions concerning the University's tax-withholding procedures, in-house forms or tax-reporting documents, contact the Tax Accountant at (970) 351-1828.