NRA Form W-4 Instructions

In November of 2005, the IRS issued new rules for withholding on wages of nonresident employees. Whether your are a nonresident employee for tax purposes depends upon the results of the 183-day residency formula as determined by the International Tax Navigator using your immigration status/history and U.S. days. The goal of the new rules is to provide withholding on wages that more closely approximates your income tax liability. The new rules accomplish this with new Form W-4 rules and special payroll computations for withholding on wages. When completing Form W-4 under the new form rules, you must:

1). Check only "Single" marital status on line 3 (regardless of actual marital status).

2). Claim only one withholding allowance on line 5, unless a resident of Canada, Mexico, Japan, or South Korea, or a US National.

3). Write "Nonresident Alien" or "NRA" above the dotted line on line 6.

4). Do not claim "Exempt" withholding status on line 7.

Nonresident aliens are no longer required to request additional withholding amount. However, like all other employees, nonresident aliens may request additional withholding at their option.

Nonresident aliens may be exempt from tax or the withholding of tax. Even if no tax treaty exists to exempt the NRA from withholding federal and state taxes, the NRA may still qualify for the FICA tax exemption. It is strongly recommended that the hiring department have the NRA complete a Foreign National Information Questionnaire and contact Payroll Services for a tax analysis. Payroll Services will see that all tax related forms are completed accurately and submitted to the correct international or governmental agency.

Residents of Mexico or Canada or US nationals: A US national is an indivdiual who although not a US citizen, owes his or her allegiance to the United States. US nationals include American Samoans and Northern Mariana Islanders who chose to become US nationals instead of US citizens. If you are a resident of Mexico or Canada or a national of the United States, you can also claim a personal exemption for your spouse if your spouse had no gross income for US tax purposes and was not the dependent of another taxpayer. In addition, you can claim exemptions for your dependents who meet certain tests. Residents of Mexico, Canada, or national of the United States must use the same rules as US citizens to determine who is a dependent and for which dependents exemptions can be claimed. See Publication 501 for these rules. For purposes of these rules, dependents who are US nationals meet the citizenship test discussed in Publication 501.

Residents of Japan or South Korea: Nonresident aliens who are residents of Japan or South Korea may be able to claim exemptions for a spouse and children. The tax treaties with Japan and Korea impose two additional requirements on Japanese or Korean residents:

1). The spouse and children claimed must live with the alien in the United States at some time during the tax year, and 2).The additional deductions for the exemptions must be prorated based on the ratio of the alien's US source gross income effectively connected with a US trade or business for the tax year to the alien's entire income form all sources during the tax year.

Students and business apprentices from India: Students and business apprentices who are eligible for the benefits of Article 21(2) of the Unites States-India Income Tax treaty can claim additional withholding allowances on line 5 for the standard deduction and their spouses. You can claim an exemption for your spouse if he or she had no gross income during the year and is not the dependent of another taxpayer. You can claim an additional withholding allowance for each dependent NOT admitted to the United States of F-2, J-2, or M-2 visas if they meet the same rules that apply to US citizens. See Publication 501 for these rules. Also, you do not have to request the additional withholding on line 6.

American Samoa or Puerto Rico or Guam: If you are a nonresident alien who is a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you generally are taxed the same as resident aliens and should follow the standard Form W-4 Intructions.

• *IRS Publication 501: "Exemptions, Standard Deductions, and Filing Information"

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