Transcript Slide 1

Slide 1
FastFacts
Feature Presentation
December 9th, 2008
We are using audio during this session, so please dial in
to our conference line…
Phone number: 877-322-9648
Participant code: 182500
Slide 2
Today’s Topic
We’ll be taking a look at…
Hiring a Non U.S. Citizen
Slide 3
Today’s Presenter
Denise Church
Senior Accountant, Controller’s Office
Slide 4
Session Segments
Presentation
Denise will address hiring a Non-U.S. Citizen.
During Denise’s presentation, your phone will be muted.
Q&A
After the presentation, we’ll hold a Q&A session.
We’ll open up the phone lines, and you’ll be able to ask
questions.
Denise will answer as many of your questions as time allows.
Slide 5
Contact Us
If you would like to submit a question during the presentation or if
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Slide 6
Survey
Survey
At the end of this FastFacts session, we’ll ask you to complete a
short survey.
Your honest comments will help us to enhance and improve
future FastFacts sessions.
Slide 7
Hiring a Non U.S. Citizen
Slide 8
Agenda
Today we’ll discuss:
Information required to hire a non U.S. citizen to work in the
U.S.
The importance of creating the ISR correctly
How tax residency status is determined in SAP
Proper taxation of non U.S. citizens
Treaty benefits
Tax reporting documents issued to non U.S. citizens
Slide 9
Introduction
Slide 10
Assumptions
Non U.S. citizen is present in the United States
Has appropriate work authorization
Required information
Nationality (country of citizenship)
Visa type
Immigration documents
Original U.S. arrival date
Temporary or permanent U.S. Social Security number
Slide 11
Creating the ISR
Slide 12
Key Fields on the ISR
Slide 13
Key Fields on the ISR
Nationality- Country of citizenship
Common Visa Types
F-1 – Academic student
J-1 – Exchange visitor (may be a student or a non-student)
H1-B1 – Worker in a specialty occupation
TN – Professional business person from Canada or Mexico (NAFTA)
LPR – Lawful Permanent Resident – “Green Card Holder”
Slide 14
Key Fields on the ISR-continued
Visa Issue Date- taken from immigration documents
Visa End Date- taken from immigration documents
Expiry of WP- taken from immigration documents
Generally matches the visa end date
Slide 15
I-20 Form for Students
F-1 academic student visa holders
are issued the Form I-20
Use these dates to populate the
“Visa Issue Date” and “Visa End
Date” on the ISR
Issued by JHU international offices
JHMI (SOM, SOPH, SON)
Homewood
Carey Business School &
School of Education
Peabody
SAIS
Slide 16
Form DS-2019
J-1 visa holders are issued Form
DS-2019
Exchange visitor
Student
Non-student
Important Information
Box 3- Visa issue/end dates
Box 4- Exchange Visitor
Category (if the visitor is a
student indicate this in the ISR
comments section)
Issued by JHU international offices
Slide 17
Original U.S. Entry Date
Must be present in the U.S. and have appropriate work authorization
Tourist visa history is not considered
Date of initial arrival in the U.S.– not arrival at JHU
Date of first arrival in the U.S. holding an F-1, J-1, H1-B1 visa
Is the student/scholar coming to JHU from elsewhere in the U.S.?
Does the non U.S. citizen already have a Social Security number?
Tip: The first three digits of a SSN issued in MD usually begin with 212
– 220. A SSN beginning with any other three digits was probably not
issued in MD.
Slide 18
Arrival Date Scenarios
Entered the U.S. from China for the first time on 08/26/08 on an F-1
visa to attend JHU as a graduate student.
Does not have a U.S. Social Security number.
Arrival date is 08/26/08.
Entered the U.S. from Germany on 09/04/04 to attend school at
New York University. Returned to Germany for brief visits and
vacations.
Obtained a U.S. Social Security number in New York.
Graduated from NYU in May 2008 and arrived at JHU for
graduate school in September 2008.
Arrival date is 09/04/04.
Entered the U.S. from Australia on 06/21/06 as a J-1 research
scholar. Had visited U.S. before holding a tourist visa on 10/15/01.
Does not have a U.S. Social Security number.
Arrival date should be 06/21/06.
Slide 19
Form I-9
Slide 20
Form I-9
Form I-9 – Employment Eligibility Verification
Original Form I-9 is completed by the International Student and
Scholar Services Office or other office designated by the individual
JHU school
Re-verification of Form I-9 is required to extend work authorization
expiration date
Will be required as a result of a visa extension or the issuance of
a new visa type
Slide 21
Determining Tax Residency
Status
Slide 22
Resident vs. Nonresident Alien
Two separate United States Income Tax Systems
One system applies to U.S. Citizens and Resident Aliens for tax
purposes
The other system applies to non-resident aliens for tax purposes
Determining residency status for tax purposes requires obtaining
visa history, current visa status and original U.S. arrival date
Slide 23
Tests to Determine Tax Residency
Green Card Test
A green card holder or LPR (Lawful Permanent Resident) is a visa
type. These individuals are Resident Aliens for tax purposes by
definition.
Substantial Presence Test (SPT)
Mathematical test calculated by length of time in the U.S. combined
with visa type.
Residency status based on the SPT is determined by master data
on the new hire ISR.
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Taxation
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Taxation of Resident Aliens
Resident aliens are taxed exactly like United States citizens. They
are entitled to the same deductions and credits.
Not restricted when completing Federal Form W-4
Taxed in the U.S. on worldwide income
Social Security and Medicare tax exemption applies if the resident
alien is in full time student status
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Taxation of Nonresident Aliens
Nonresident aliens are not taxed like United States citizens.
Most cannot claim dependents or a standard deduction on their
federal income tax return.
They are not entitled to the same deductions and credits.
Nonresident aliens are restricted when completing Federal Form W-4
Nonresident aliens are taxed in the U.S. on income from U.S. sources
only
Social Security and Medicare tax exemption applies if the
Nonresident Alien is holding an F-1 or J-1 visa
Slide 27
Tax Summary Chart
Correctly identify nonresident aliens in the payroll system so they are properly taxed
Federal
Income
Tax Withholding
State & Local
Income
Tax Withholding
FICA (Social
Security &
Medicare Tax)
NRA with Wages
Subject to at
graduated rates
Subject to at
graduated rates
Exempt if holding
an F-1 or J-1 visa
NRA Fellowship
Subject to at 14%
flat rate
Subject to at
graduated rates
Not applicable
RA with Wages
Subject to at
graduated rates
Subject to at
graduated rates
Subject to unless
full time student
RA Fellowship
Not applicable
Not applicable
Not applicable
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Special Rules for NRA Forms W-4
NRA’s can’t claim exempt
Must check “Single,” or
“Married,” but withhold at
higher single rate box on line 3
Should enter a 1 on line 5
Write “Nonresident Alien” or
“NRA” above the dotted line on
line 6 of Form W-4
Slide 29
Examples of Incorrect Tax Treatment
This is incorrect: A nonresident alien holding either an F-1 or J-1
visa earning wages is exempt from Social Security and Medicare tax
withholding – if payroll record doesn’t reflect NRA status their wages
will be subject to these taxes.
This is incorrect: Fellowship payments received by a Nonresident
Alien holding an F-1 or J-1 visa are subject to federal income tax
withholding at a flat rate of 14% and to MD income tax at
graduated rates - if payroll record doesn’t reflect NRA status these
payments will not be subject to withholding.
Slide 30
Treaty Benefits
Slide 31
Treaty Benefits for NRA’s
Many countries have negotiated income tax treaties with the United States.
Treaty benefits will impact a nonresident alien’s federal income tax.
Student wage benefits are usually subject to a dollar limit
Fellowship benefits usually provide an unlimited dollar amount
Teacher/researcher benefits usually provide an unlimited dollar amount
Maryland does not recognize tax treaty benefits
The District of Columbia and Virginia do recognize tax treaty benefits
Slide 32
Processing Treaty Benefits
The JHU Tax Office processes treaty benefits and creates the treaty
info type IT0556 in the SAP payroll record.
Forms
Wages: Form 8233 is used to claim a withholding exemption
from treaty eligible wages. It is completed by the employee and
the JHU Tax Office and then forwarded to the IRS for
processing.
Fellowships: Form W8-BEN is completed to claim a withholding
exemption from treaty eligible fellowship income. It is
maintained by the JHU Tax Office.
Slide 33
Tax Reporting
Slide 34
Tax Reporting Documents- W2
Wage and Tax Statement
issued each year to
employees.
Reflects total taxable wages
earned each calendar year
and total federal and state
income tax withheld.
Issued to nonresident alien
employees who didn’t claim a
treaty withholding exemption
on their wages or weren’t
eligible for a treaty benefit.
Slide 35
Tax Reporting Documents 1042-S
Reports treaty wages received
by an NRA
Reports non treaty fellowship
payments received by an NRA
and the federal tax withheld
on these payments
Reports treaty fellowship
payments received by an NRA
Note: Box 16 reflects
recipient’s country of tax
residence. This required field
on Form 1042-S is derived
from the nationality
(citizenship country) in the
SAP record.
Slide 36
In Conclusion
Slide 37
Summary
Required information when hiring a non US citizen:
Citizenship country
Visa type
Original US arrival date
Determination of correct tax residency status depends on this
information
Ensures the non U.S. citizen is properly taxed
Slide 38
Resources - JHU Tax Office
JHU Tax Office is located on the Eastern Campus in Suite D200
Tax Office walk in hours – No appointment necessary
Tuesday and Thursday afternoon 2:00 PM – 4:30 PM
Wednesday morning 9:00 AM – 12:00 PM
Web site address: http://www.controller.jhu.edu/depts/tax/index.html
E-mail address: [email protected]
Telephone: 443-997-8688
Slide 39
Other Resources
JHU International Offices
JHMI Office of International Student, Faculty and Staff Services:
http://www.hopkinsmedicine.org/intlsvcs/
Homewood Office of International Student and Scholar Services:
http://ww2.jhu.edu/isss/
Carey Business School and School of Education One Stop Student
Services Office: http://onestop.jhu.edu/international/
Peabody Office of International Student Affairs:
http://www.peabody.jhu.edu/116
SAIS International Student and Scholar Services Office:
http://www.sais-jhu.edu/students/international/office-information.htm
Slide 40
Other Resources (Cont)
Link to JHMI Office of International Student, Faculty and Staff
Services Visa Chart:
http://www.hopkinsmedicine.org/intlsvcs/visachart.pdf
HRSS web site address:
http://ssc.jhu.edu/humanresources/index.html
Link to sample NRA Form W-4 on HRSS web site:
http://ssc.jhu.edu/humanresources/DataFiles/taxform.pdf
Slide 41
Q&A
We’re going to open the phone lines now!
There will be a slight pause, and then a recorded voice will provide
instructions on how to ask questions over this conference call line.
We’ll be answering questions in the order that we receive them.
We’ll also be answering the questions that were emailed to us
during the presentation.
If there’s a question that we can’t answer, we’ll do some research
after this session, and then email the answer to all participants.
Slide 42
Thank You!
Thank you for participating!
We would love to hear from you.
Are there certain topics that you would like us to cover in future
FastFacts sessions?
Would you like to be a FastFacts presenter?
Please email us at: [email protected]
Slide 43
Survey
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