Information for Nonresidents
Most students in F-1 and J-1 immigration status may be employed for up to 20 hours per week when school is in session and up to full-time during authorized vacation periods. Employment is limited to on-campus jobs only, without additional authorization from either USCIS or a staff member of the UM International Center.
Employment of postdoctoral researchers and others in J-1 non-student status is also common. Persons in J-1 non-student status are generally eligible for full-time employment at UM and may be in benefit-eligible positions.
NRA Hiring Procedures at UM
When a department decides to hire an NRA, all routine "new hire" paperwork should be completed with no delay. The W-4 must be completed with name, address, SSN, and a signature and date. (The figures on the W-4 are irrelevant to the "new hire" process for an NRA.) There is no requirement to have an SSN at the time of hire for a newly-arrived NRA.
New employees who are not U.S. citizens will receive an email from the Nonresident Tax Office concerning the employee's tax status. The Nonresident Tax Office will collect all relevant information (either by email or an in-person meeting) to determine the employee's tax residency, FICA status, and eligibility for any tax treaty benefit.
Scholarships paid to NRA students will be taxable income for any portions of the scholarship greater than the student's educational expenses or any amount provided directly to the student by cash or check. Educational expenses include resident and nonresident fees, student activity fees, information technology fees, and any additional fees required by an academic department. The portion of a scholarship determined to be taxable will generally be withheld at a rate of 14%. A tax treaty may reduce or eliminate the required withholding on taxable scholarships.
Nonresidents with taxable scholarship income will be contacted by the Nonresident Tax Office.
Filing Tax Returns
Individuals who earn income in the United States (including international students and researchers) are required to file income tax returns, which are reports filed with the government to determine the total tax owed for that tax year. The result of a tax return may be a refund of tax withheld, or an additional amount of tax to pay. Nonresidents will generally use either form 1040NR or form 1040NR-EZ to file their tax return with the IRS.
Form W-2: All employees who have taxable income from employment in the United States will receive a form W-2, which is a statement of earnings. This form will be available through the University MyHR system or by mail. The W-2 is essential for filing a tax return for persons with taxable employment income.
If a nonresident alien was employed at another U.S. location during the tax year, it is important to make sure that the other employer has a current address so that the W-2 from that employer is received.
Form 1042-S: All nonresident aliens who have scholarships that are greater than the amount of their fees or have tax treaty exempt wages will receive a 1042-S from UM. Prizes and awards are also reported on a 1042-S. (Persons who have only a fee waiver or a scholarship less than their semester fee charges will not be issued a 1042-S.) The NRA will receive this form before March 15. Therefore, persons with the above types of income may not file a tax return until after they have received their 1042-S. For many nonresidents at UM, the 1042-S will be accessible through your account with FNIS.
The United States currently has tax treaties with more than 60 countries. These treaties are designed to decrease the likelihood that nonresidents will be taxed on the same income in both the U.S. and the country of tax residency. Treaty benefits will not be honored unless appropriate treaty forms are completed and on file at UM.
Tax treaty benefits for students receiving compensation for employment are generally limited to a specific amount of income for each tax year (usually between $2,000 and $5,000 per year). Most treaty benefits will end once the student becomes a resident alien for tax purposes, so most treaty benefits will last no more than five years.
Tax treaty benefits for scholarship income may also be available for students, even if there is not a corresponding treaty for employment income.
Tax treaties for non-students (usually teachers and researchers) are generally not limited to a specific amount of income, but are limited by a specific number of years. In some cases, if a non-student remains in the U.S. beyond the period covered by the treaty (usually two years from the date of entry), a "retroactive clause" in the treaty requires payment of all taxes that were previously exempt. It is therefore important to monitor these dates and treaty benefits carefully.