Nonresident Alien (NRA) Tax FAQ

What does "exempt individual" mean?

What does "exempt individual" mean?

An "exempt individual" is someone who is exempt from counting days of presence for the Substantial Presence Test. These individuals are

  • students temporarily present in the U.S. under an F, J, M or Q visa and who substantially comply with the requirements of the visa are exempt individuals for no more than five calendar years and
  • non students are exempt for no more than two years.

Note: This term has nothing to do with whether the individual will be exempt from having federal income tax or social security and Medicare taxes withheld - or filing a U.S. tax return.

What is the "Green Card Test"?

What is the "Green Card Test"?

The "green card test" is another U.S. residency status test that is used to determine whether a non-U.S. citizen will be treated as a resident alien for U.S. tax purposes. An individual will be treated as a U.S. permanent resident alien for tax purposes if he is a lawful permanent resident alien at any time during a calendar year. The individual will be deemed to have obtained this status if he

  • has been granted lawful permanent residence status in the U.S. and
  • has been issued or will receive an alien registration card (also known as a green card) by the Immigration and Naturalization Service (INS).

It is important to realize that although the individual will be treated as a U.S. permanent resident alien for the entire year, the withholding agent must wait to treat him as such until he has met the test (an official INS document).

Who is a "resident alien for tax purposes"?

Who is a "resident alien for tax purposes"?

An individual who has met or passed the substantial presence test by virtue of the number of days physically present in the U.S. or has been granted lawful permanent residence in the U.S. as a permanent resident alien. A resident alien is taxed on his/her worldwide income in the same manner as a U.S. citizen.

Who is a "nonresident alien for tax purposes"?

Who is a "nonresident alien for tax purposes"?

An individual who has not met or passed the substantial presence test by virtue of the number of days physically present in the U.S. or has not been granted lawful permanent residence in the U.S. as a permanent resident alien. A nonresident alien is taxed only on his/her income from U.S. sources, using special tax withholding, reporting, and filing requirements different from those of a U.S. citizen or resident aliens for tax purposes.

What is the difference between "nonresident" and "resident" alien for tax purposes?

What is the difference between "nonresident" and "resident" alien for tax purposes?

A nonresident alien is taxed only on his income from U.S. sources, using special tax withholding, reporting and filing. Resident aliens are taxed on their worldwide income, the same as U.S. citizens.

What is a "Tax Treaty"?

What is a "Tax Treaty"?

An income tax treaty is a bilateral agreement between two governments under which each country agrees to limit or modify the application of its domestic tax laws in an attempt to avoid "double taxation" of income (having the same income taxed by both countries).

Why must I pay taxes to the U.S. government if I am an international student working on campus?

Why must I pay taxes to the U.S. government if I am an international student working on campus?

You must pay taxes in order to comply with both federal and state tax regulations. The federal regulation is Internal Revenue Code Sec. 1-871-1(a) and the state regulation is California Revenue and Taxation Code 17951.

Who is a Nonresident Alien?

A nonresident alien is any person who is not

  • a U.S. citizen;
  • a lawful permanent resident (green card holder), or
  • able to pass the Substantial Presence Test

Who is a Nonresident Alien?

A nonresident alien is any person who is not

  • a U.S. citizen;
  • a lawful permanent resident (green card holder), or
  • able to pass the Substantial Presence Test
Is money I receive from my parents from abroad taxable?

Is money I receive from my parents from abroad taxable?

It is not taxable if the money is not from U.S. source income.

What types of taxes will be deducted from my paycheck?

What types of taxes will be deducted from my paycheck?

The income you receive as an employee of CSUSB is considered U.S. source income and is taxed according to U.S. tax laws. Generally there are four types of taxes withheld from your paycheck:

  • Social Security Tax
  • Medicare (FICA). F, J, M, and Q visa holders are exempt from FICA during their "exempt" years.
  • Federal Income Tax
  • State Income Tax

     

What is a "W-2"?

What is a "W-2"?

A W-2 is an annual record of your earnings and taxes withheld for the year. It is used to file your income tax returns.

What is a "1042-S"?

What is a "1042-S"?

A 1042-S is an information return used to report U.S. source income paid to a nonresident alien subject to regulations under sections 1441 and 1442. Employee compensation paid to a nonresident alien with tax withholding under a tax treaty is reported on a 1042-S. Employee compensation paid to a nonresident alien without a tax treaty is reported on a W-2. All non-employee compensation payments made to a nonresident alien (independent contractor payments, honoraria, royalties, awards) and non-service, non-qualified scholarships and fellowship grants to the extent includable in U.S. source income are reported on 1042-S.

Do I need a Social Security Number to file taxes?

Do I need a Social Security Number to file taxes?

No, however, you will need an Individual Taxpayer Identification Number (ITIN) if you do not have a Social Security Number (SSN). You must have one or the other to file a tax return.

Do I have to pay taxes on my scholarship?

Do I have to pay taxes on my scholarship?

If you are a nonresident alien and the scholarship is NOT form U.S. sources, it is not subject to U.S. taxes. If your scholarship is FROM U.S. sources or you are a resident alien, your scholarship is subject to U.S. taxes according to the following rules:

If you are a candidate for a degree, you may be able to exclude from your income the part of the scholarship you use to pay for tuition, Tuition Fees, books, supplies and equipment required by the educational institution. However, any part of the scholarship used to pay for other expenses, such as room and board. Is taxable.

What does "NRA" mean?

What does "NRA" mean?

NRA is an acronym for Non Resident Alien.

What is the "Substantial Presence Test (SPT)"?

What is the "Substantial Presence Test (SPT)"?

The Substantial Presence Test is a tax residency test for non resident aliens developed by the Internal Revenue Service. The test counts how many days you have been present in the United States during the current and prior two years. You must have been present less than 183 days during the three-year period to be qualified as a nonresident alien for tax purposes. Once you pass the 183 days, you become a resident alien for tax purposes. You must count all days present in the current year; 1/3 of the days present in the first prior year; and 1/6 of the days present in the second prior year.

If you are not physically present for more than 30 days during the current year, you will fail the test, even though the three-year total is 183 or more days.