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Non-Resident Taxation Information
Students and Scholars
General Non-Resident Information (FAQs)
Non-Resident Employment
Non-Residents Receiving Scholarship/Fellowship
Non-Residents Receiving Accounts Payable payments (travel reimbursement, honoraria, speaker fees, etc.)
Non-Residents Receiving Awards and Prizes
General Non-Resident Information (FAQs)
Am I a Resident for Tax or a Non-Resident for Tax?
Student Visas
(F-1, J-1, M-1, Q-1) have 5 "exempt individual" years or
less.
Teacher/Researcher/Trainee Visas
(J-1) have 2 "exempt individual"
years or less.
Example: An F-1 student who enters the US in 2003 will have 5 exempt
years (2003, 2004, 2005, 2006, and 2007). This means when the SPT is
performed, these years will reflect "0" days of presence.
The term "exempt individual" is used for SPT purposes only and
reflects only "exempt" from counting days of presence. This does not refer
to "exempt" from Federal, State, FICA taxes, or from filing a federal or
state tax return.
What are tax treaties and am I eligible to have one?
Tax treaties are tax agreements between the US and other countries to
decrease the likelihood for taxation both in the US and in the country of
tax residency. Tax treaties are considered a benefit to students and
scholars and are not mandatory. The correct forms and documents must be
submitted to Human Resources and eligibility must be determined to have the
tax treaty honored.
Student Tax Treaties:
The tax treaty benefits for student compensation are typically limited by
dollar amount (typically $2,000 - $5,000) and years of presence (typically 5
years). Most tax treaties will terminate when a student becomes a Resident
for Tax. For a complete listing of
Student Employee
Eligible Countries Click Here
Tax treaties benefits are also available for scholarship students. These
typically do not have a dollar amount, but can be limited by years of
presence. For a complete listing of
Student
Scholarship Eligible countries Click Here
Non-Student Treaties (Teacher, Researcher, Scholar)
The tax treaty benefits for non-student compensation are not typically
limited to a dollar amount, but are limited by a specific number of years.
Some countries have retroactive clauses attached to the treaties which means
the benefit of the treaty is lost if the time limit of the treaty is
exceeded. It is extremely important to be aware of the limits of the treaty
and personal time commitments to the employer to determine if the treaty
should be taken. For a complete listing of
Non-Student
Eligible countries Click Here
Can I work with out a Social Security Number?
Yes. Human Resources will issue a "dummy" number to enter you into the
payroll system. This number is valid for 60 days and is for University
purposes only. This is not a valid Social Security (SSN). You must apply for
the "real" SSN immediately upon beginning employment. SSN are only for
working individuals, if you are not working, you are not eligible for an SSN.
Human Resources will not honor a tax treaty without a SSN.
How many hours can I work?
A student can work up to 20 hours a week on-campus when school is in
session. During summer break, winter break and spring break students are
eligible to work 40 hours (or more, if determined by department). Curricular
Practical Training (CPT) and Optional Practical Training (OPT) are
exceptions to the 20 hour rule. Permission for CPT and OPT must be granted
before beginning employment.
Non-Resident Employment
Students who have not worked on campus before MUST set an appointment
with Jonathan. If you have worked on campus before, you will need to contact
Jonathan to verify that all paperwork is current.
Make an Appointment
You need to set up an appointment with Jonathan Nelson, Non-Resident Tax
Specialist. You can contact Jonathan at 575-2158 or
nelsonj@uark.edu. You must
have an appointment. All Human Resources paperwork will be completed (I-9,
W4, Direct Deposit), taxation to paycheck will be discussed, tax treaty will
be applied (if applicable), etc. You are required to bring your Passport,
I-94, Immigration Paperwork (I-20, DS-2019, I-797, EAD card) and social
security card (if already have a number).
GLACIER
After making an appointment, I will email instructions and a password for
accessing our online tax software - GLACIER. GLACIER must be completed
before the appointment. GLACIER is tax compliance software used by Human
Resources to determine your tax residency and any applicable tax treaties.
Types of Taxes
There are three taxes that can be assessed in Arkansas: Federal Tax,
Arkansas State Tax, and FICA Tax (this appears as OASDI and Medicare on your
earnings statement).
- Exemptions to Federal Tax: A Tax Treaty is the only exemption to
paying Federal Tax. Even though a country has a valid tax treaty with
the US, this does not guarantee the tax treaty will be honored. Human
Resources reserves the right to disallow a tax treaty, if we believe all
aspects of the treaty are not honored. For a complete listing of
Student
Employee Eligible Countries Click Here
- Exemptions to State Tax: If you are certain you will make under
$7,800 for a calendar year (January - December), you can claim exempt.
**This does not exempt you from the requirement to file a state tax
return**
- Exemptions to FICA Tax: Typically if a student or scholar is
considered to be a Non-Resident for tax, they are exempt from these
taxes. Once you pass the SPT then you are no longer exempt from these
taxes, and are required to pay these taxes from January 1 of the year
you become a Resident for Tax. F-1 and J-1 students are typically exempt
for 5 years; J-1 teacher/researchers are typically exempt for 2 years.
The -2 visa holder (i.e. J-2, F-2) is not exempt from FICA in any
circumstance.
Why Taxes Are Important
The United States tax system, like any tax system is difficult to interpret and
understand. Unfortunately, ignorance is not a valid reason for not correctly
withholding and filing U.S. taxes. Not having the proper amount withheld from
payment and not correctly filing a tax return could have implications to
receiving or renewing a U.S. Visa. This may also cause future taxation problems,
as a person can be audited up to 3 years from the tax filing date. The Human
Resources Non-Resident Taxation Specialist will assist in correctly withholding
the correct amount of taxes from each payment and will assist in answering any
questions in regards to non-resident taxation.
Social Security Card
Social Security Numbers (SSN) are only for employed students or scholars. If
you are not employed then you are not eligible to have a social security
number. You do not need to have a social security card to begin work. Human
Resources will determine if you are eligible to work, and at that time a "dummy" social security number will be issued. The
"dummy" number is valid
for only 60 days and you MUST apply for a "real" SSN immediately upon
receiving employment. Once you receive the SS card, you MUST bring a copy to
Human Resources, at that time any tax treaties will be honored.
Applying for the Social Security Number
On-Campus Employment Rules
Students:
A student can work up to 20 hours a week on-campus
(including Carnell Hall and Chartwells) when school is in session. During
summer break, winter break and spring break students are eligible to work 40
hours (or more, if determined by department). Curricular Practical Training
(CPT) and Optional Practical Training (OPT) are exceptions to the 20 hour
rule. Permission for CPT and OPT must be granted before beginning
employment. Working more than 20 hours a week (even 15 minutes) will
result in a violation of your F-1 Status. This carries serious consequences.
A week begins on Sunday and ends on Saturday.
Scholars:
Scholars may work 40 hours (or more, if determined by
department). Scholars can be placed on either hourly employment or appointed
employment.
J-2 Visa Holders:
Must be authorized to work (EAD card). Can work 40
hours (or more, if determined by department).
Non-Residents Receiving Scholarship/Fellowship
Scholarships made to Non-Resident (NRA) students may be taxed. Tax for
scholarships is determined by taxing the amount of scholarship in excess of
applicable (Qualified) tuition and fees. Qualified expenses include:
- Tuition
- Fees - required of all students
- Books
- Supplies
Non-Qualified expenses include:
- Stipend payments
- Living expenses
- Room and Board
- Cash
- Non-Required Equipment
These lists are not exhaustive, but typically you can consider an expense
qualified if it is required of all students throughout the University. If the
fee is required by your major, this does not mean it is a qualified scholarship
because it is not required by all students. For instance, one college may
require a computer for its students, but this is not required for all University
students, so it is not a qualified expense.
Scholarship Tax is basically assessed by taking the amount of Scholarship
and subtracting the amount of qualified tuition and fees and the difference
is taxed at 14%.
Example: A student has $10,000 in scholarship and has $8,000 in tuition
and fees. He/she would then receive a check for $1,720 due to the taxes on
the scholarship.
| $ |
10,000 |
scholarship |
|
-$ |
8,000 |
in applicable tuition and fees |
| $ |
2,000 |
in taxable scholarship |
| X |
14% |
taxed at 14% |
| $ |
280 |
in tax |
In some cases, you will have more expenses than scholarship but because
some of the expenses are non-qualified, you will have to pay tax.
Example: A student has $10,000 in scholarship and has $10,000 in tuition
and fees, but $3,000 of the expenses are for room and board. The room and
board will be taxed.
| $ |
10,000 |
scholarship |
|
-$ |
7,000 |
in applicable tuition and fees (minus $3,000 for
room and board) |
| $ |
3,000 |
in taxable scholarship |
| X |
14% |
taxed at 14% |
| $ |
420 |
in tax |
Exemptions to paying scholarship tax:
To be exempt from paying scholarship tax, you must have an eligible tax
treaty for scholarship income. To honor the tax treaty for scholarship
income, you must have a SSN or Individual Tax Identification Number (ITIN),
NO EXCEPTIONS. Student
Scholarship Eligible countries Click Here
Scholarship tax will be reported on form 1042-S, which is provided to
students by March 15 each year. Students will use this form to report taxes
and may be eligible to have some tax refunded.
Non-Residents Receiving Accounts Payable payments (travel reimbursement, honoraria, speaker fees, etc.)
Students:
Students who receive travel expenses in relation to their
compensation/employment (attending a seminar, conference, etc. in relation
to your employment) will not be taxed. This falls under the accountable plan
which applies to all employees.
Students who receive travel expenses in relation to their
scholarship/fellowship (attending a seminar, conference, etc) will be taxed
at 14%. This includes travel reimbursement or payments made on your behalf.
The 14% tax can be exempted due to an applicable tax treaty. To honor the
tax treaty for travel expenses, you must have a SSN or Individual Tax
Identification Number (ITIN), NO EXCEPTIONS.
Student Scholarship Eligible countries Click Here
Teacher/Researchers:
Teacher/Researcher/Scholars who receive travel expenses in relation to
their compensation (attending a seminar, conference, etc. in relation to
your employment) will not be taxed. This falls under the accountable plan
which applies to all employees. Travel reimbursements will be paid through
the travel office and any other payment will be paid through Payroll. The
university policy states an employee will be paid through Payroll.
Non-university employee payments will be made through Accounts Payable.
Payments made to Non-University Employees or Students, click for
Information for payments to Guests of the U of A
Non-Residents Receiving Awards and Prizes
Awards and Prizes made to Non-Residents for Tax will be taxed at 30%. NO
EXCEPTIONS. Tax treaties do not apply to awards and prize money. If the
recipient of the award or prize is an employee, the prize money will be paid
through payroll with the applicable 30% taxation removed. If the recipient
is a non-employee (student) then the payment will be paid through Accounts
Payable. The prize or award money will be reported on a form 1042-S, which
is distributed by March 15 each year.
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