Wayne State University

Non-Resident Aliens

Non-Resident Aliens

A Non-resident alien is an individual who is permitted to enter the United States on a temporary basis for the purpose and period indicated by their immigration documents.

The Payroll Office of Wayne State University is responsible for the appropriate taxation* and collection of taxes for all aliens (resident and non-resident) as well as US citizens who are employed or received a non-qualified scholarship or fellowship at Wayne State University.

The Payroll Office does not assist with any applications necessary to enter in to the United States or work in the U.S. or here at Wayne State University. These applications or forms should have been processed or in process (i.e. Visa, Social Security Card, Employment Authorization Card, or extension of status) before contacting the Payroll Office.   Please coordinate with your department and the Office of International Students and Scholars (www.oiss.wayne.edu) to ensure your forms are completed, accurately, and timely.

First step: Determining Alien Tax Status

If you are an alien (not a U.S. citizen), you are considered a nonresident alien unless you meet one of two tests: the green card test or the substantial presence test for the calendar year (January1 – December 31). If you do not meet either the Green Card Test or the Substantial Presence Test, then you are a nonresident alien.

Green Card Test: You are a Lawful Permanent Resident of the United States, at any time, if you have been given the privilege, according to the immigration laws, of residing permanently in the United States as an immigrant. You generally have this status if the U.S. Citizenship and Immigration Service (USCIS) issued you an alien registration card, Form I-551, also known as a "green card." You continue to have resident status, under this test, unless you voluntarily renounce and abandon this status in writing to the USCIS, or your immigrant status is administratively terminated by the USCIS, or your immigrant status is judicially terminated by a U.S. federal court.

Substantial Presence Test: You will also be considered a U.S. resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States on at least:

  1. 31 days during the current year, and
  2. 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
    • All the days you were present in the current year, and
    • 1/3 of the days you were present in the first year before the current year, and
    • 1/6 of the days you were present in the second year before the current year.
  3. Generally, the days the alien is in the United States as a teacher, researcher, student, trainee, exchange visitor, or cultural exchange visitor on an "F", "J", "M", or "Q visa are not counted. This exception is for a limited period of time. For more information on resident and nonresident status, the tests for residence, and the exceptions to them, refer to Publication 519 on the Internal Revenue Service website: www.IRS.gov.

Example:
You were physically present in the United States on 120 days in each of the years 2006, 2007, and 2008. To determine if you meet the substantial presence test for 2008, count the full 120 days of presence in 2008, 40 days in 2007 (1/3 of 120), and 20 days in 2006 (1/6 of 120). Since the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2008.

Resident Aliens

A resident alien is an individual that is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year.

Resident aliens are generally taxed in the same way as U.S. citizens.

Filing Requirements for Nonresident Aliens

Nonresident aliens are subject to U.S. income tax only on their U.S. source income. There are various types of incomes, such as earned income or wages, royalties, or scholarships and fellowships.  Each type of income has a different taxation. 

Scholarships & Fellowship Grants (Stipend)

A scholarship or fellowship grant (sometimes referred to as a stipend) is an amount given to an individual for study, training, or research, and which does not constitute compensation for personal services.

The portion of a scholarship or fellowship paid to a nonresident alien which does not constitute a qualified scholarship is reportable on Form 1042-S and is subject to NRA withholding. For example, those portions of a scholarship devoted to travel, room & board or other living expenses are subject to NRA withholding and are reported on Form 1042-S. The withholding rate is 14% on taxable scholarship and fellowship grants paid to nonresident aliens temporarily present in the United States in “F”, “J”, “M”, or “Q” nonimmigrant status. Payments made to nonresident alien individuals in any other immigration status are subject to 30% withholding.

Tax Treaties

The United States has income tax treaties with a number of foreign countries. For nonresident aliens, these treaties can often reduce or eliminate U.S. tax on various types of personal services and other income, such as royalties or scholarships/fellowships (stipends). Each individual treaty must be reviewed to determine whether specific types of income are exempt from U.S. tax or taxed at a reduced rate. More details can be found in Publication 901, U.S. Tax Treaties on the Internal Revenue service website: www.IRS.gov.

If there is a tax treaty between an alien’s country and the United States, an alien may come in to the Payroll Office to fill out an application for to apply for a tax treaty.  If an alien is eligible for the tax treaty, the benefit of the tax treaty will be applied to the next payment and is applicable for through December 31 of the current year.  An alien must apply every year for the tax treaty. 

Please bring the following documents to apply for a tax treaty:

  • IRS Form: 8233 (www.IRS.gov)
  • Passport
  • Visa
  • I-94
  • One Card
  • Offer Letter, if applicable
  • IRS Form: W-8 Ben (only for scholarship/fellowship recipients) 
    Normally, this is completed by the School/College/Division.

* The Payroll Office does not give nor offer tax advice i.e. how to prepare tax returns or how many exemptions to claim. Please consult a tax preparer, tax adviser, or the Internal Revenue Service regarding questions of that nature.