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NON-RESIDENT (FOREIGN NATIONAL) FAQ




Who is a foreign national?
A foreign national is someone who is not a U.S. citizen or national. U.S. citizens include persons born in Puerto Rico, Guam, the U.S. Virgin Islands, and the Northern Mariana Islands. Nationals of the U.S. include persons born in American Samoa, including Swains Island.

Who needs a visa?
Anyone who is traveling to the United States must have a visa. The University of Montana will mainly see the following nonimmigrant visa types: F-1 (student), J-1 (Exchange Visitors and their families), TN (Exchange Visitors from Canada and Mexico), and H1B (Specialty Workers). Once a visa is received a traveler is authorized to travel to the United States. However, a visa does not guarantee that they will be allowed to enter the United States. Immigration has authority to grant or deny admission and to determine how long they may stay in the United States.

My visa stamp expired. Am I out of status?
The fact that the visa stamp has expired does not necessarily imply that the person is out of status. The visa stamp is only the authorization to come into the United States. A person may come to the U.S. change or extend status and stay with an expired visa stamp. If your I-94 card is expired but you have extended your stay with a valid I-797 approval, you are still in status. If your I-94 card and your I-797 are both expired and you have not applied for a renewal, then you are almost certainly out of status.

Am I limited in how long I may work?
Non-Resident Alien students may work a maximum of 20 hours per week while school is in session. When school is not in session (i.e. winter break, Summer if not enrolled) an NRA student may work any number of hours. Working in excess of 20 hours per week while school is in session is prohibited by the U.S. Department of Justice, and could endanger your visa status.

My visa or work authorization has expired. May I continue to work?
NO. Under no circumstances may you continue to work unless you submit a proof of extension or an application for an extension. An application for an extension of the Employment Authorization Card is not acceptable. Also, if you are changing your visa type, you may not work in the interval between the expiration of the prior visa type and the receipt of INS approval for the new visa type. You should initiate your paperwork well in advance of (preferably 3 months prior to) the expiration date of the current visa. Bring your new document to your Home Department Coordinator as soon as you receive it to ensure your pay is not interrupted.
The following documents require re-verification upon expiration:

  • I-20 (F-1 visa)
  • DS-2019 (formerly IAP-66) (J-1 visa)
  • I-797 (H-1B visa; O-1 visa)
  • I-94 Card showing TN (Trade-Nafta), Canada or Mexico only
  • INS stamp "In process for I-551"
  • I-766, I-688, I-688A, or I-688 Cards (usually held by those with asylum paroled into the US, in process for residency, F-1 practical training, and J-2 visa holders)
  • "Conditional" Resident Alien Cards (valid only for 2 years from issue)

When do I have to submit a Foreign National Information Form?
A Foreign National Information Form (also known as Substantial Presence Test Form) is an information form Payroll Services requires to ensure that you are reported and taxed correctly. You have to submit a Foreign National Information Form each academic year (September 1 - August 31).

What is the “substantial presence test”?
The “substantial presence test” is the Internal Revenue Service’s measure of whether an individual has been present in the U.S. long enough to qualify as a resident alien for tax purposes; and therefore, the individual is subject to tax on his or her worldwide income. The substantial presence test is not used for immigration purposes, but to determine the Federal tax withholding status. An individual will be treated as a U.S. resident for tax purposes in the current year, if he or she is physically present in the U.S. for at least 31 days during the current calendar year and a total of 183 days during the three-year period. The three-year period includes the current year and two years preceding the current calendar year. In calculating the 183 days the individual counts:

  • The number of days in the U.S. during the current year
  • 1/3 of the number of days present in the U.S. during the 1st year preceding the current calendar year
  • 1/6 of the number of days present in the U.S. during the 2nd year preceding the current calendar year

  • This test is completed based on the Foreign National Information Form that you complete each year.



Forms:

What is a visa?
A visa is a permit to apply to enter the United States. If needed, it is normally obtained at an American consulate outside the United States. It classifies the visit as business, tourism, etc. and is usually valid for multiple visits to the United States during a specified period of time.

What is an I-94 card?
An I-94 (Arrival/Departure Record) is created by the Bureau of Citizenship and Immigration Services (BCIS) when the traveler is inspected upon arrival in the United States. The inspector endorses the Form I-94 with the date, place of arrival, the “class of admission” (which corresponds to the visa class), the length of time the traveler may remain in the United States, and any special conditions, which may apply to the visit. The inspector keeps the Arrival portion of the form and returns the endorsed departure portion to the traveler who must keep the card in his possession until he leaves the United States. When the traveler leaves the United States he must surrender the departure portion of the I-94 to the airline representative, if he travels by air, or to the immigration or customs officer if he departs across the border to Canada or Mexico.

What is an I-20?
This document is issued to foreign nationals who have been accepted by the University as a prospective student. The I-20 will be issued by one of the following offices: Foreign Student Services, the Graduate School, Admissions, or the English Language Institute. On the I-20 the student and his sponsor (the person who will pay for living expenses and tuition) demonstrate that the student will have enough funds available to undertake studies in the United States without working. This document along with transcripts and other documents allow the student to apply for a F-1 visa.

What is a DS-2019?
This document is issued to foreign nationals by either Foreign Student Services or International Programs. An accredited sponsor of an exchange visitor program is empowered by the U.S. Information Agency (USIA) to issue a certificate of eligibility for each visitor (DS-2019 (formerly IAP-66)). The exchange visitor must take the certificate to a U.S. consulate to apply for issuance of a J-1 visa.

What is a Foreign National Information Form?
(Substantial Presence Test Form) This form has a two-fold purpose. The first being to gather information from foreign nationals attending The University of Montana, to comply with Federally mandated regulations. The second is to use the immigration information provided to calculate a foreign nationals “substantial presence test” which in turn determines, for tax purposes only, if a foreign national qualifies as resident alien.

What is an NRA W-4 Form and how do I fill it out?
You must file an NRA W-4 form to declare your Federal tax withholding status. When completing the NRA W-4, you:

  • May not claim "Married"
  • May not claim "Exempt"
  • May not claim more than “0” allowance.

What is Form W-8BEN?
Form W-8BEN "Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding" is a form filed by non-resident aliens receiving a fellowship, scholarship, or stipend, to claim tax status.

What is Form W-9 and when can I file it?
Form W-9 is a tax document which declares you to be a "resident alien for tax purposes." Filing a W-9 has two immediate consequences:

  • It negates all tax treaty protections and provisions.
  • It gives you more options in what you want to claim on your W-4 (any marital status, number of allowances, or "exempt").

Generally, you should file a W-9 only after you have been in the U.S. for at least the periods of time noted for the following visa types, and then only if you feel it is appropriate:

  • F-1 After 5 years in the U.S.
  • J-1 Student After 5 years in the U.S.
  • J-1 Scholar After 2 years in the U.S.
  • H-1 After 183 days in the U.S.

Lommasson Center


Taxes:

Are NRAs automatically exempt from FICA and Disability taxes?
No. Your visa type determines what taxes you must pay:

VISA TYPES FICA F-1 Exempt for the first 5 years from date of entry; thereafter may be exempt based on student enrollment. J-1 Students Exempt for the first 5 years from date of entry; thereafter may be exempt based on student enrollment. J-1 Scholars, Researchers Exempt for either the first 2 calendar years in the US, or 2 out of the first 6 calendar years in the US regardless of visa status H-1B, O-1 Must pay FICA. J-2, H-2 Must pay FICA.

How do I fill out an NRA W-4 Form?
You must file an NRA W-4 form to declare your Federal tax withholding status. When completing the NRA W-4, you:

  • May not claim "Married"
  • May not claim "Exempt"
  • May not claim more than "1" allowance.

Why do I have to pay U.S. taxes if I’m not a resident of the United States?
All wages earned in the United States by employees living in the United States are subject to U.S. federal withholding taxes. If however your particular country has entered into a Tax Treaty Agreement with the U.S. you may be exempted from the tax-withholding requirement. See IRS Publication 901 "US Tax Treaties" at the IRS web site for more information.

Does the University of Montana report my income and scholarships to the IRS and my home country?
The IRS requires that both taxable and non-taxable payments made to non-resident aliens be reported on either Form 1042-S or Form W-2 which are mailed out to you by January 31st of every year. The only exception is if the payment is foreign source income. The IRS then follows their internal procedure for reporting to each country.

What is the difference between a resident alien for tax purposes and a nonresident alien for tax purposes?
There are two distinct tax systems created under the Internal Revenue Code, the resident tax system and the nonresident-alien tax system. Resident aliens are taxed on their worldwide income, the same as U.S. citizens in the U.S. Nonresident aliens are taxed only on their U.S.-source income.

Who is an “exempt individual” for tax purposes?
An “exempt individual” is one who qualifies to exclude days from the calculation under the substantial presence test – and as a result, extends the period of time before he or she will be considered a resident alien for tax purposes. In order to qualify as an exempt individual, the individual must be present in the U.S. temporarily and be in substantial compliance with the conditions with the conditions of his or her visa. In addition, the individual must match one of the following profiles:

  • The individual is present as a teacher/researcher/trainee or postdoctoral fellow on a J or Q visa who was present in the U.S. as a teacher, researcher, trainee, postdoctoral fellow, or student for no more than (any part of) 2 of the 6 preceding calendar years.
  • The individual is present as a student on an F, M, J or Q visa for no more than (any part of) 5 preceding calendar years. In order to “reset” the count of these five years back to zero, the individual must leave the U.S. for an entire calendar year period (January 1 to December 31).

What if I no longer qualify as an “exempt individual” – are there other ways I may be considered a nonresident alien for tax purposes?
If an individual no longer qualifies as an exempt individual, the individual may fall under several other exceptions. Note , however, that each of these exceptions requires that the individual provide explicit written verification to the University.

STUDENTS PRESENT LONGER THAN 5 CALENDAR YEARS - may continue to extend a student exempt individual status beyond the 5-year minimum if he or she meets all of the following conditions:

  • The individual plans to temporarily reside in the U.S. and intends to return to his or her country of residence upon completion of studies.
  • The individual provides the University with written proof that he or she has established with the local IRS district director that he or she does not intend to reside in the U.S. once his or her education is completed, and
  • The individual is in substantial compliance with the requirements of his or her current student visa.
  • CLOSER CONNECTION EXCEPTION. The individual must provide a copy of the IRS closer connection determination letter to the Human Resource Services Office to effectively claim this type of exemption status.

What is FICA?
The Federal Insurance Contributions Act (FICA) provides a system of social security and Medicare benefits financed through taxes on employers and employees. FICA taxes and benefits consist of two parts: Social Security or Old Age Survivors, and Disability Insurance (OASDI), and Hospital Insurance for senior citizens and the disabled (Medicare).

Am I exempt from FICA tax withholding?
An individual can be exempt from FICA if he or she is:

  • A nonresident alien
  • Present in the U.S. under an F-1, J-1, or M-1 visa
  • Performing services in accordance with the primary purpose of the visa’s issuance (i.e. the primary holder of the visa, the “1” visa holder).

  • Please note the following:
  • Alien employees who hold F-1 or J-1, or M-1 visa, but are considered resident aliens for Federal tax purposes, are not eligible for the FICA exemption. However, students would be eligible for the student FICA exception if they are carrying the minimum course load.
  • The spouse/dependents of the primary visa holder F-2, J-2, or M-2 are not eligible for the FICA tax exemption.

Why do I need a Social Security Number or an Individual Taxpayer Identification Number?
A resident or nonresident alien employed by the University must obtain a Social Security Number (SSN). Any individual not eligible to obtain a SSN must obtain an Individual Taxpayer Identification Number (ITIN). The requirement to obtain an ITIN applies primarily to nonresident aliens who receive honorarium or other payments for independent contractor services or who are recipients of scholarship or fellowship payments. The SSN or ITIN is required on individual tax returns filed with the tax authorities by the employee.

How is my status for Montana State income tax purposes determined?
Montana does not distinguish between U.S. citizens, U.S. residents, and nonresident aliens with respect to State income tax withholding. Wages paid to nonresidents of Montana for services performed inside the State are subject to withholding for State income tax.

How may I obtain more information about my Federal and State tax status?
For more information on Federal tax status, contact the IRS at: World Wide Web Address: http://www.irs.gov Telephone: 1-800-829-1040 For more information on State tax status, contact the Montana Department of Revenue: World Wide Web Address: http://www.discoveringmnontana.com/revenue/css/default.asp Telephone: 1-406-444-6900




Tax Treaties

What is a tax treaty, and how does it apply with respect to wages paid to NRAs?
A tax treaty is an agreement entered into between 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 - that is, having the same income taxed by both countries. Tax treaties vary, but they generally limit or exempt U.S. taxation of compensation made to residents of the foreign country. Some tax treaties are limited to an amount of time per year, and/or a limited dollar amount per year. Wages earned beyond either limit are subject to federal income tax. Tax Treaties apply to Federal taxes only; you are still required to follow State tax requirements. See IRS Publication 901 "US Tax Treaties" at the IRS web site for more information.

I think I am eligible for a tax treaty, is there a form I need to file for a tax treaty exemption?
Form 8233 allows you to claim "exempt" from federal withholding on earnings as allowed by certain tax treaties. You have to submit an 8233 form when you are hired/rehired, whenever you change job types or visa types, and each December for the upcoming calendar year if the tax treaty is to be applied. If an 8233 is not filed, the tax treaty will not be applied, and the University of Montana will grant no tax refund if taxes are withheld. You would still be able to file your tax return (Form 1040-NR) with the IRS to obtain a refund.

How do I complete Form 8233?
As an employee of the University of Montana, your employee and visa information will have been entered into an International Tax software program called WindStar. If you are eligible for a tax treaty WindStar will automatically generate the documents (Form 8233, and a Revenue Procedure Letter (RPL)) needed for filing the Tax Treaty exemption and you will need to contact the Human Resource Services Office in the Emma B. Lommasson Center, to sign the documents. These will then be submitted to the Internal Revenue Services office on your behalf. There is a period of 10 business days that we are required to wait before we can exempt the tax –withholding deduction.

What is a Revenue Procedure Letter (RPL)?
A "Revenue Procedure Letter" is a supporting statement to the Form 8233 and is required by the IRS tax treaties. The RPL is a series of statements dictated by the IRS used in justifying your eligibility for exemption from Federal tax withholding. If you cannot complete the RPL because the statements on the RPL do not apply, then you cannot claim benefits from the tax treaty provisions. This letter justifies your eligibility to be exempt from Federal tax withholding. If Form 8233 and RPL are not submitted fully completed, Federal income tax will be withheld, and no refund of any Federal taxes will be granted.

How is a tax treaty applied to Scholarships or Fellowships?
Like wages, some tax treaties also exempt monies paid via scholarships or fellowships. For further details, go to the IRS web site, and see IRS Publications 515, 519, 520, and 901.

With which countries does the U.S. currently have a tax treaty?
See IRS Publication 901. For further questions, go to the IRS web site, or call 1-800-829-1040.

Visa Restrictions & Requirements


TN Visa Holders:

Are there any restrictions to my employment?
The position that you are employed into must be in a profession listed on Schedule 2 of NAFTA, (http://travel.state.gov/tn_visas.html) you must also meet the minimum education requirements and alternative credentials necessary to be considered a professional.

What documents do I need to work at the University of Montana?
In addition to the normal hiring paperwork, foreign nationals on a TN visa need to submit originals of the following documents (copies will be made and originals returned), the I-94 card (Arrival/Departure Report), passport, VISA, and their U.S. Social Security Card.




F-1 Visa Holders:

Are there any restrictions to my employment?
Since an F-1 visa is issued to persons intending to pursue educational opportunities, that should be the main focus and full-time enrollment in courses in required. Students may, while maintaining a valid visa status, engage in on-campus employment for not more than 20 hours per week, during the school session and up to and including 40 hours per week during school breaks, including summer. The exception to this would be as the student nears completion of their degree, they can be employed directly related to their field of study through Curricular Practical Training or Optional Practical Training, both of which require prior approval by Foreign Student Services.

What documents do I need to work at the University of Montana?
In addition to the normal hiring paperwork, foreign nationals on an F-1 visa need to submit originals of the following documents (copies will be made and originals returned), the I-94 card (Arrival/Departure Report), passport, visa, I-20, their U.S. Social Security Card, a work authorization letter from Foreign Student Services or designation on page 3 of the 1-20 and a Foreign National Information Form.




J-1 Visa Holders:

Are there any restrictions to my employment?
Persons on a J-1 Student visa would have the same restrictions as those on a F-1 visa which would included full-time enrollment in courses in required. Students may, while maintaining a valid visa status, engage in on-campus employment for not more than 20 hours per week, during the school session and up to and including 40 hours per week during school breaks, including summer. Additionally persons on a J-1 visa may only work for the sponsoring employer (i.e. The University of Montana). Persons on a J-1 Visitor visa may only work for the sponsoring employer within the guidelines of the program approved by the U.S. Information Agency (USIA) for the period designated by the DS-2019, which authorizes the foreign nationals employment.

What documents do I need to work at the University of Montana?
In addition to the normal hiring paperwork, foreign nationals on an J-1 visa need to submit originals of the following documents (copies will be made and originals returned), the I-94 card (Arrival/Departure Report), passport, visa, DS-2019, their U.S. Social Security Card, a work authorization letter from Foreign Student Services or designation on page 3 of the I-20 (for students only) and a Foreign National Information Form.




H1-B Visa Holders:

Are there any restrictions to my employment?
An H1-B visa is employer specific, job specific. This means that persons on an H1-B visa may only work for the sponsoring employer within the guidelines of the program/position approved by the U.S. Immigration and Naturalization Services (INS) for the period designated on Form I-797B Notice of Action Receipt.

What documents do I need to work at the University of Montana?
In addition to the normal hiring paperwork, foreign nationals on an H1-B visa will have already submitted as part of the H1-B application process the additional documentation needed for employment. These include, but are not limited to a passport, U.S. Social Security Card, degree/diploma, resume/CV, and current visa and I-94 card (Arrival/Departure Report) if applicable.

How do I obtain this FAQ in a printable version?
For a WORD version of this FAQ, please click here and print.


RESOURCES




Human Resource Services

Emma B. Lommasson Center
Room 252

The University of Montana

Missoula, MT 59812

Phone: 406-243-6766

Fax: 406-243-6095