Georgia Tech is required by the U.S. Internal Revenue Service (IRS) to withhold federal income tax from ALL payments made to (or on behalf of) a nonresident alien. Regulations also require that Georgia Tech report all such payments to the IRS. Therefore, Georgia Tech must review all data related to the immigration status and purpose of their stay of all payment recipients at Georgia Tech who are not U.S. citizens or lawful permanent residents. Determining tax residency and tax treaty eligibility is a complicated and difficult task which is why Global Human Resources at Georgia Tech uses tax compliance software called GLACIER.
Updates
Your 2018 tax returns must be completed by you and mailed on or before April 17, 2018. However, foreign nationals who received wages or other payments from Georgia Tech should wait until after February 11, 2019 to begin their returns. Please note: filing of income tax returns and payment of taxes is not voluntary, it is required by law. All GT non-US citizens (who are not U.S. green card holders) should first use the GLACIER tax compliance system to determine if they are a resident or nonresident alien for tax purposes.
If GLACIER determines that you are a nonresident for tax purposes you will be able to complete your federal tax return (at no cost to you) by using Sprintax. (To gain access to Sprintax you will need to submit a Sprintax Access Request Form available in iStart beginning Feb. 11, 2019.) Sprintax can also be used to prepare your state tax return (for a small fee.)
If you qualify as a resident for tax purposes, you cannot use Sprintax. Resident aliens file taxes in the same manner as U.S. citizens and can file using regular 1040 tax forms. Therefore, there are a number of tax preparation companies and software available for use; the IRS website provides many documents and free software to assist tax residents.
Both resident and nonresident aliens for tax purposes who claimed treaties in 2018, as well as all those students who are nonresident aliens for tax purposes receiving scholarships greater than tuition, will need a form 1042-S to complete their tax return. 1042-S forms will be released after Feb. 11, 2019. Recipients will receive an email from GLACIER when the form is ready.
The tax act passed in December 2017 took away the Personal Exemption from all taxpayers. This increases the taxable income for Nonresident aliens by $4,050 for the year, and therefore slightly increases the income tax withholding in each paycheck. Indian nationals on F-1 visas should expect to see a small decrease in taxes as they are permitted to take the standard deduction on their tax returns, and the standard deduction has been doubled. This did not change the tax treaties between the US and home countries.
Frequently Asked Questions
Why Is My Tax Status Important?
In order for Georgia Tech to comply with U.S. tax laws, it is necessary for GT to determine your U.S. tax residency status. The IRS has developed a test of days present in the U.S. and rules as to which foreign nationals are subject to that test: Substantial Presence Test. GT’s reporting requirements to the IRS are determined by the payee’s tax residency.
What is the Difference between a Nonresident Alien and a Resident Alien?
A nonresident alien for tax purposes is taxed only on her U.S. based income and has tax rates specific to nonresidents. A resident alien for tax purposes is subject to U.S. taxation on her worldwide income, i.e. you are taxed in the same manner as a U. S. citizen.
How Long Will I Be a Nonresident Alien?
F-1 and J-1 student visa status holders are generally nonresident aliens for tax purposes for five calendar years. J-1 nonstudent visa status holders have a more complicated test that looks at a period of two years out of six. J-1 nonstudents visa status holders often become resident aliens for tax purposes in their third calendar year in the U.S. Other nonimmigrant aliens will often become resident aliens for tax purposes in less than one year’s time. The U.S. tax system is based on a calendar year period (January 1 – December 31). In most cases, when your U.S. residency status for tax purposes changes, you will become a resident alien for tax purposes retroactive to the first day of the calendar year during which your status changed, i.e. 1 January.
What If I Do Not Submit My Forms and Documents?
If you do not complete the information in GLACIER and submit the required forms and documents, the maximum amount of tax will be withheld from all payments made to you.
How Will I Be Taxed as a Nonresident Alien (NRA) on Payments From U.S. Sources?
As a Nonresident Alien for Tax Purposes without a tax treaty, U.S. tax law requires that you be taxed in the following manner:
- Employment
Employees are subject to an NRA graduated withholding table on your wages and required by tax code to file a form W-4 (Employee’s Withholding Allowance Certificate) as a single person with one allowance—regardless of your marital status.
- Scholarships/Fellowships
Awards for mandatory tuition and fees are not reportable and not taxable.
Awards for room and board and other expenses are reportable and have 14% withheld for taxes for F, J, Q, and M visa status holders and 30% for other visa status holders.
Can I Be Exempt From Tax Withholding?
Approximately 63 countries have tax treaties with the United States and some of these treaties allow payments of one type or another to international students and/or scholars to be exempt from U.S. taxation. The tax compliance software, GLACIER will determine whether or not you qualify for a tax treaty exemption, and will provide you with the necessary information and forms to take advantage of your tax treaty benefits. Often, this paperwork must be renewed on an annual basis, so be sure to renew the paperwork at the appropriate time each year.
Still have questions? Email nra.ask@ohr.gatech.edu
