Most income received in the United States (U.S.) is subject to federal and state taxation, and in most cases, the University is required to withhold federal taxes from payments made to or on behalf of foreign nationals in NRA status. Foreign-sourced payments, such as a scholarship applied to a Student Account from a country outside the U.S., are not subject to U.S. taxation.
The University will not make any payment to an NRA unless specifically allowed by FSM Policy 9.16 Payments to Nonresident Aliens. Allowability is dependent on the visa status of the individual and the nature of payment.
Potential allowable payments may include but are not limited to:
- Wages paid to an employee
- Compensation paid for independent services
- Scholarship or fellowship awards
- Prizes or other awards
- University business expense reimbursements
If an NRA receives payment, an annual Form W-2 to report wages, payroll taxes and withholding for employees and/or a Form 1042-S reporting other taxable payments and withholding will be issued by the University to the NRA.
NRAs who receive payments are generally required to file annual income tax returns. Free Federal tax preparation and filing software for University employees and students is available via International Student Services. Withholding deducted throughout the calendar year is used as payment against the tax liability of the NRA. If too much tax was withheld, the NRA may receive a refund. If not enough was withheld, the NRA may owe additional monies.
The U.S. has income tax treaties with many countries. Using Sprintax Calculus, an NRA can determine if an income tax treaty is available to be applied to reduce or eliminate required withholding on their payments.
For NRA students with scholarships, tuition waivers, or other awards exceeding tuition and mandatory fees in their Student Account, these amounts are non-qualified and taxable, and the University is required to apply default withholding to the excess. If the student holds a F, J, M, or Q student visa type, the default withholding rate is 14%. For all others, the default rate is 30%. A completed Sprintax Calculus record with an applicable income tax treaty claimed is required to be submitted to potentially reduce or eliminate required withholding.
The calculation of taxable excess fluctuates as charges and payments are applied to a Student Account. Withholding on Student Accounts is reviewed regularly for accuracy and any necessary adjustments are made.
Scholarships, tuition waivers or other awards that cover only tuition and mandatory fees are considered qualified and are not taxable. NRA students with amounts that do not exceed University tuition and mandatory fees will not have tax withholding applied to their Student Account.
- Access to free Federal tax filing and preparation software for University students and employees and additional tax information for international students: International Student Services
- Employee payroll taxes, Form W-2, or Form 1042-S questions: Payroll
- Additional tax information for international employees: Payroll for International Employees
- Student account withholding adjustments: Bursar
- IRS Tax Forms and Publications
Please contact Tax Services for information about University-related tax issues. University employees, while in their official role at the University, are not allowed to act as tax consultants or provide personal tax advice. Use of this site does not constitute advisement. For personal tax questions, individuals should consult with a professional tax advisor.