Foreign National Employees: Payroll Taxes & Treaty Benefits

LAST UPDATED: July 30, 2014

What You Should Know

Scholars, professors, researchers, and students with F, J, M or Q visas may be employed by Princeton University. Earnings are subject to withholding of tax on payments to nonresident aliens for individuals with an employment status of non-resident alien. If your country of residence has a tax treaty with the United States, you may apply for tax treaty benefits to claim exemption from U.S. Federal tax.

Tax Withholding on Your Earnings

As a foreign national employee, you must submit the W-4 form printed from the Glacier System to Nonresident Tax Compliance and Reporting. Your marital status and exemptions will be restricted to S (single) with 1 (one exemption), if Glacier determines you are a nonresident for tax purposes.

FICA Taxes
You are exempt from U.S. Social Security and Medicare taxes (FICA taxes) throughout the year until you become a resident alien for tax purposes.

  •  F, J, M or Q- student employees generally maintain non-resident status for the first five calendar years in the U.S. Students also fall under the student FICA exemption, so generally do not pay FICA taxes during the academic year even after they become residents for tax purposes.
  • J-1 researchers generally maintain non-resident status for the first two calendar years in the U.S. On January 1 of the third calendar year in the U.S. FICA taxes will be applied.

Tax Treaty Benefits for Foreign National Employees

Many countries have agreements with the U.S. to exempt the individual or entity from withholding of tax on payments to nonresident individuals or foreign entities. The provisions of these agreements, called tax treaties, vary; few tax treaties are alike. Employees and students of Princeton University who elect treaty benefits based on their country of residence will avoid double taxation.

Eligibility
To be eligible for treaty benefits you must have a U.S. Social Security Number (SSN) or Individual Tax Identification Number (ITIN). See Davis International Center to apply for a SSN.If you need an ITIN, follow these instructions.

The Glacier System will determine whether your country of residence has an applicable tax treaty with the United States. If you are eligible to claim a treaty benefit, the system will offer the treaty application. You will receive an e-mail from Glacier reminding you to submit your application for the upcoming calendar year.

Claiming Treaty Benefits
To claim tax treaty benefits, you must submit a treaty application each year. The University treaty renewal process begins early November for the next calendar year. The Glacier System will prompt you to enter the information and print the documents you must submit to Nonresident Tax Compliance and Reporting.

If you have missed the University’s deadline of September 15 for submitting your treaty documents (8233, W8BEN, W9), you still can claim treaty benefits on your personal income tax return. If eligible, you will receive a refund from the Internal Revenue Service (IRS) of any excess tax withheld.

If you receive your SSN or ITIN after the treaty renewal process, simply update your profile in the Glacier System by entering your SSN or ITIN, answering all the questions as you go through your complete records. Print your updated Tax Summary Report and treaty form(s) and send them through campus mail to Nonresident Tax Compliance and Reporting. A copy of your recent visa documents must be submitted with your forms.

Note:

Nonresident Tax Compliance and Reporting forwards your treaty benefit application to the IRS. Treaty benefits are effective ten business days after being sent to the IRS and according to the payroll cycles, if approved.


 

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