PY - Employee Foreign Nationals
You can use this Frequently Asked Questions (FAQ) document to get answers to your questions concerning employee foreign nationals for payroll tax reporting purposes.
Who is a Foreign National for tax purposes?
For tax purposes, a Foreign National is an individual who is not a citizen or national of the United States.
Note: A Foreign National may also be referred to as an alien or nonimmigrant.
Who is a U.S. Resident for tax purposes?
A foreign national is considered a U.S. tax resident if they have either:
a) passed the IRS Substantial Presence Test (and are now a resident alien for tax purposes), or
b) are a Permanent U.S. Resident (green card holder).
Who is a Nonresident Alien for tax purposes?
a. A nonresident alien for tax purposes is an individual who has not passed the IRS Substantial Presence Test at a given point in time
b. is not a U.S. Permanent Resident (green card holder)
c. is not a U.S. citizen or U.S. national
What is the Substantial Presence Test?
A test created by the U.S. Internal Revenue Service (IRS) to determine whether a foreign national is considered a U.S. tax resident (including Resident Alien) or a Nonresident Alien at a given point in time.
Reference: U.S. Tax Guide for Aliens, Publication 519
What Criteria is Used to Determine Whether Someone Will Pass the Substantial Presence Test?
An individual must enter information about all current and prior U.S. visits (since 1985) into their Glacier account. Based on their information, Glacier will perform the substantial presence test and report the results on the individual's Glacier Tax Summary Report.
To pass the substantial presence test, the individual must be physically present in the United States for at least:
a. 31 non-exempt days during the current calendar year, and
b. 183 non-exempt days using the following formula:
(1) Each day of non-exempt U.S. physical presence during the current calendar year
(2) One-third (1/3) of the days of non-exempt U.S. physical presence during the previous calendar year (i.e. 2013 in 2014)
(3) One-sixth (1/6) of the days of non-exempt U.S. physical presence during the second previous calendar year (i.e. 2012 in 2014)
*Individuals in F and J status have certain years exempted from inclusion in the substantial presence test. It is essential that individuals list all U.S. presence (since 1985) in their Glacier account so a proper substantial presence test may be performed.
Reference: U.S. Tax Guide for Aliens, Publication 519
Questions to ask a Foreign National questioning the Substantial Presence Test results calculated by Glacier
Q Did you enter information about all your U.S. visits since 1985 in your Glacier account?
Q If you did not have enough lines to list all visits, did you at least include all visits in F and J status plus all U.S. visits the current and two previous calendar years -- regardless of the immigration status during those visits? If not, you must contact the Glacier Responsible Administrator for your institution for further instructions.
Q Does the final U.S. departure date you listed in Glacier reflect either the last day you will be physically present in the U.S. during the current calendar year (for ANY reason) or the date you expect to leave and remain outside the U.S. for 365 days or more?
Q Did you include all U.S. presence information regardless of UW affiliation during that presence?
What is the significance of the substantial presence test results and U.S. tax filing status?
Resident aliens, Permanent U.S. Residents (green card holders), and U.S. citizens are taxed differently than Nonresident Aliens. To make sure the correct amount of tax is withheld from income, foreign nationals must make certain they have entered current and complete information in their Glacier account.
Does a Nonresident Alien file different U.S. federal and state income tax returns than Resident Aliens?
Yes. Tax filing information is available on the UW website at:
What if a Foreign National's immigration or U.S presence information changes?
Individuals must keep their Glacier account information up-to-date with current and complete information. Following ANY updates, they must print, sign and deliver a new Glacier Tax Summary Report and copies of the forms and documents listed on it to the appropriate address for their institution (not necessarily the contact information printed on their Glacier Tax Summary Report instructions). Instead, they should log onto https://uwservice.wisconsin.edu/helppayroll with their UW credentials, then select the Foreign nationals tab. Once they select their institution in the box at the top left of the page, it will list where they should deliver their materials and who to contact for help. Individuals who are leaving the UW for 365 consecutive days or more should inform the listed contact, who will terminate their Glacier account.
The Foreign National is eligible for a tax treaty withholding exemption but is having tax withheld from their income.
Individuals who are nonresident aliens for tax purposes must deliver a new Form 8233 and attachment each year. Form W8-BEN must be delivered every third year. Resident aliens must deliver form W9. All forms are generated through Glacier. The foreign national must print, sign, and deliver their Glacier-generated treaty forms, attachments, and Tax Summary Report to the correct location for their institution. Identify this location by logging onto https://uwservice.wisconsin.edu/helppayroll with UW credentials, selecting the Foreign Nationals tab, then selecting their institution at the top left of the page. It will then list where they should deliver materials and who to contact for help. Note: FICA tax (OASDI/MED) is not covered under any tax treaty withholding exemptions.