International Student and Scholar Services

Nonresident Alien Tax Information--Information for Departments

 

What should a department do when hiring an NRA?

What if the NRA employee does not have a Social Security Number?

What must departments do when making payments through Accounting to NRA's?


What is the procedure for scholarship awards?


What is the procedure for prizes and awards?


What is the procedure for honorarium payments?


How does the nonresident file their tax return?


How can I learn more about the NRA taxation process at UMSL?



What should a department do when hiring an NRA?

When a department decides to hire an NRA who is already present in St. Louis, all routine "new hire" paperwork should be completed with no delay.

The W-4 must be completed with name, address, SSN and a signature and date. Most NRA's must file at the "Single" tax rate with no more than "1" allowance in box 5.  Exceptions:  Students from Canada, Mexico, Korea, and India can claim additional allowances for non-working spouses and children in some cases.  Also, an NRA married to a U.S. citizen or U.S. resident can elect to be treated as a U.S. resident in some cases.

There is no requirement to have an SSN at the time of hire for a newly-arrived NRA.

The new employee should be directed to complete and submit the UM374 Tax Assessment Intake Form as soon after the hire as possible. The UM374 (Tax Assessment Intake Form) is available here.

Once the UM374 has been completed, the employee must contact Jim Webb, the UMSL Nonresident Alien Taxation Specialist at 516-5229 to schedule an appointment.

The employee must bring their passport, all immigration documents, their social security card (if they have one), and the completed PAF to the appointment.

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What if the NRA employee does not have a Social Security Number?
A Social Security number is not required from nonresident employees before they are allowed to begin work. However, a Social Security number is required before a foreign employee can benefit from a tax treaty exemption from withholding.

On July 1, 2002, the Social Security Administration (SSA) was mandated to verify Social Security number applicants with a U.S. Citizenship and Immigration Services (USCIS) database. While modifications are being made to the system to provide for more expeditious review, this process currently may take several weeks.

Because of this new system, the SSA suggests that newly-arrived nonresidents wait 10 days after their U.S. arrival before submitting an application for a Social Security number. The Social Security Administration requires proof of employment as well as verification of immigration status. Procedures to make the application process go as smoothly as possible have been implemented and are outlined in the packet, "How to Apply for a Social Security Number". That packet is available online, or in the Office of International Student and Scholar Services, 261 MSC.

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What must departments do when making payments through Accounting to NRA's?
Accounting will not be processing any payments for nonresident aliens except those that are for a reimbursement of business-related expenses in accordance with the "accountable plan."

All payments made to nonresident aliens other than wages and scholarships paid through Financial Aid must go through the Nonresident Alien Taxation Specialist and are to be submitted on the form UM376A (Non-Employee Alien PAF) (pdf).

See procedures for scholarship, prize, and honorarium recipients directly below.

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What is the procedure for scholarship awards?
There are currently two mechanisms to provide NRA scholarship payments at UMSL.

1. Departments submit the scholarship information to Financial Aid so the amount is applied directly to the student account (MyView) or
2. Departments submit forms UM376A to the NRA Taxation Specialist so the payment is processed through PeopleSoft Payroll. (This is for scholarship recipients who are not enrolled students.

Nonqualified scholarships are taxable income to both nonresidents and U.S. students. A taxable scholarship is any amount greater than the semester academic fees or amounts provided directly to the student in the form of cash or a check. Nonqualified scholarships made to NRA students who have completed the UM374 tax assessment process will generally be taxed at a maximum of 14% unless a tax treaty exemption applies. If there is no tax assessment on file, withholding will be at 30% (required).

All NRA recipients must be provided with the UM374 immediately following the departmental scholarship decision to facilitate completion of the tax assessment process.

Students who have already completed the tax assessment process do not need to submit the UM374 again. They must contact Jim Webb at webbjj@umsl.edu so the scholarship can be added to existing income information.

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What is the procedure for prizes and awards?
Prizes and awards are always considered U.S. source income for NRA's, and withholding of U.S. taxes is required at 30% unless a tax treaty applies and the recipient has either a U.S. Social Security Number or Individual Taxpayer Identification Number (ITIN).

Recipients may complete and submit the UM374 from anywhere in the world, and may submit copies of passport and identification documents via fax at 314-516-5636 or by e-mail as a scanned attachment.

Departments must provide a completed UM376A for each prize recipient.

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What is the procedure for honorarium payments?
1. Before arrival of the NRA, departments should contact the NRA Tax Specialist at webbjj@umsl.edu with general information about the NRA and the nature of honorarium payment(s). This will maximize tax benefits and allow anticipation of withholding amounts by both the department and the NRA. Withholding will be 30% in the absence of tax treay benefits.

2. The NRA must complete and submit the UM374, which can be downloaded as a pdf here. To expedite the process, the form can be completed prior to arrival in the United States. Visa information will be incomplete at that time, so the NRA should estimate planned arrival and departure dates and immigration status for purposes of the form submission.

3. After arrival of the NRA, an appointment must be scheduled with the NRA Taxation Specialist and the NRA. The NRA must bring the following documentation to the appointment:

a. Passport and all immigration documents (to verify eligibility for honorarium payment).
b. Evidence of SSN or ITIN, copy of application already submitted, or completed IRS W-7 (provided by the UMSL NRA Taxation Specialist).

4. Prior to the arrival of the NRA, if possible, the department must submit to the NRA Taxation Specialist the following documentation:

a. A copy of the contract signed by both Business Services and the NRA (if the amount of the honorarium requires a contract).
b. A completed UM378 (Supporting Statement for Honoraria and/or Reasonable Business Expenses Provided to a Nonresident Alien Admitted to the US.....).
c. A completed UM376A (no voucher is required for payments of this type).

5. During the tax assessment appointment, eligibility for tax treaty and other exemptions will be determined and appropriate forms will be printed, signed by the NRA, and forwarded to the IRS as needed.

6. Honorarium payments may be made only to a nonresident alien who is in an immigration status that legally allows such payments. These statuses generally include persons in B-1, B-2, WB, and WT status. Currently, individuals in these  statuses may be paid honorarium and associated expenses if their service to UMSL does not last more than 9 days and they have not been paid similar payments by more than 5 other U.S. institutions in the 6 months prior to arrival at UMSL. To Top

How does the nonresident file their tax return?
A. Nonresidents living in St. Louis may seek tax return assistance through the UMSL NRA VITA site each spring, according to information that will be provided at the Tax Assistance page available here at the beginning of each calendar year.

B. Nonresidents outside St. Louis will be provided assistance via e-mail and fax whenever possible. Prior to leaving St. Louis, students and researchers with income must provide a forwarding address to the NRA Taxation Specialist to ensure timely delivery of Forms W-2 and 1042-S.

C. Persons who are outside the United States on April 15 have until June 15 to file their tax return.

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How can I learn more about the NRA taxation process at UMSL?
Contact the NRA Taxation Specialist at webbjj@umsl.edu to schedule a presentation for department or division personnel that is tailored to your NRA needs.

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