INTERNATIONAL EMPLOYEES’ TAXES
Internal Revenue Service - Barbara Dawkins
Foreign National Tax Unit (UB) – Claudia Samulski Amanda Maines New York State - Suzanne Reusch
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TAX VOCABULARY
IRS = Internal Revenue Service Income Tax Return = form which all employees send to the IRS each year
to file an income tax return = to send it to the IRS
Income: money earned from a job, bank interest or investments Wages or compensation: money earned only from a job
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U.S. TAXATION
There are two types of income tax that employees in the U.S. pay: Federal (U.S.) tax State (New York) tax
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TAX VOCABULARY
To withhold income taxes (tax withholding) to subtract income taxes directly from the employee’s paycheck Exempt from paying income tax (tax exemption) excused from paying income tax due to an income tax treaty
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FOREIGN NATIONAL INFORMATION WORKSHEET
All foreign employees should complete this Worksheet.
Gives us the information that we need to determine how to withhold income taxes
A new Worksheet needs to be completed each year that you are employed at UB.
http://www.business.buffalo.edu/hrs/foreign_national_worksheet.pdf
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FOREIGN NATIONAL INFORMATION WORKSHEET
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FOREIGN NATIONAL INFORMATION WORKSHEET
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FOREIGN NATIONAL INFORMATION WORKSHEET
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FOREIGN NATIONAL INFORMATION WORKSHEET
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FOREIGN NATIONAL INFORMATION WORKSHEET
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INCOME TAX TREATIES
Exist between the United States and 47 foreign countries
32 apply to students
Either reduce or exempt income tax on a portion of earnings Apply only to federal and state tax Based on country of foreign residence not citizenship
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DIFFERENCES IN TAX TREATIES
Most income tax treaties exempt earnings from income taxes while others reduce income taxes. Exempt dollar limits = the amount of earnings that can be exempt from income tax withholding
Wages earned over the exempt dollar limit will have income tax withheld.
Exempt time limit = the number of years a foreign employee can use the income tax treaty
Begins from date of arrival in the United States
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DIFFERENCES IN TAX TREATIES
Retroactive clauses
If the exempt dollar or time limit is exceeded, exempt wages may be taxed back to the first exempt dollar earned.
To find out more about a specific income tax treaty, see the Student Income Tax Treaties handout.
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STUDENT INCOME TAX TREATIES
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TAX TREATY ELIGIBILITY
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TAX TREATY ELIGIBILITY
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TO CLAIM A TAX TREATY EXEMPTION
Complete required forms
Foreign National Information Worksheet Form 8233 Revenue Procedure
Submit forms to Foreign National Tax Unit Forms can be accessed from our websites
Refer to the Resource Sheet provided in your packet.
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CONTACT THE FOREIGN NATIONAL TAX UNIT
If you have any questions, please contact us. Contact information is on the Resource Sheet.
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U. S. TAX EXEMPTION & WITHHOLDING FORMS
FORM 8233 = “Exemption from Withholding on Compensation based on a Tax Treaty” REVENUE PROCEDURE = Required statement that is attached to Form 8233 verifying your exempt status W-4 = U.S. Income Tax Withholding form
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U.S. TAXATION INTERNAL REVENUE SERVICE
Form 8233 A nonresident alien individual should use this form to claim a tax treaty exemption from withholding on some or all compensation.
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U.S. Taxation FORM 8233
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U.S. Taxation FORM 8233
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U.S. Taxation Form 8233 Part I
Youra Name A Street Bejing 1 University Lane Amherst, New York 14228 F-1 19983361828005 January 10, 2003 China 899503662 January 2006 x China 400-00-0000
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U.S. Taxation Form 8233 Part II
Teaching assistantship (income code 19) $5000 U.S./China Tax Treaty, article 20(c) all People’s Republic of China
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U.S. TAXATION PUBLICATION 901
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U.S. Taxation Form 8233 Parts III & IV
Youra Name
1/21/03
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Revenue Procedure 87-8, 87-9 OR 93-22
Required Statement
The Revenue Procedures require Students, Teachers and Researchers to attach a statement to Form 8233.
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U.S. TAXATION
To summarize, Form 8233 is used to claim exemption from income taxes because of a tax treaty. If there is no tax treaty between your country and the U.S. OR you are not eligible to exempt your earnings from income tax, then you must fill out Form W-4.
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Sample Statement
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U.S. TAXATION TAX WITHHOLDING
Salaries, Wages, or any other pay for personal services (work) paid to a nonresident alien employee is subject to the graduated withholding method. This is the same method used for U.S. citizens and residents.
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U.S Taxation Form W-4
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U.S. Taxation Form W-4 Work Sheet
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U.S. Taxation Form W-4
Youra 1 University Lane Amherst, NY 14228
Name x
400 00 0000
1 15.30
Youra Name
1/20/03
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FICA WITHHOLDING
(Federal Insurance Contributions Act)
Deductions
appear as: - Social Security tax - Medicare tax
Nonresident
alien J -1 and F-1 students and scholars engaged in authorized employment are exempt. (Examples: campus
work, practical training and economic hardship employment)
H-1B
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and TN visa holders are not exempt.
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NEW YORK STATE TAXES
New York State complies with ALL Federal (United States) Tax treaties in accordance with the Internal Revenue Codes.
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NEW YORK STATE TAXES
For New York State Taxes, you will give to your new employer either:
IT2104 –Employee’s Withholding Allowance Certificate OR IT2104E – Certificate of exemption from Withholding
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NEW YORK STATE TAXES Which form to use?
IT2104 – Employee’s Withholding Allowance
Certificate
Use this form if:
1) You intend to earn MORE than $7500 in gross income in New York State OR 2) You can be claimed on another individual’s federal income tax return and you intend to earn MORE than $3000 in gross income in New York State.
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New York State Taxes Form IT-2104
Youra Name 400-00-0000
1 University Lane
x
Amherst, New York 14228
1 0 0
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NEW YORK STATE TAXES Which form to use?
IT2104E – Certificate of Exemption from
Withholding
Use this form if:
1) You intend to earn LESS than $7500 in gross income in New York State OR 2) You can be claimed on another individuals federal tax return and you intend to earn LESS than $3000 in gross income in New York State.
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New York State Taxes Form IT-2104-E
Youra Name
1 University Lane Amherst, New York 14228
400-00-0000 05-30-81 x
X
x
x x
Youra Name
1/21/03
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CONTACT INFORMATION
Internal Revenue Service
1-800-829-1040 http://www.irs.gov
New York State
1-800-225-5829 http://www.tax.state.ny.us/pit (716) 645-5000 ext. 1286 or 1025 http://ubbusiness.buffalo.edu
Click on “Employee.” Scroll down to “Tax Facts.” Either choose “RF” or “State.” Click on “Foreign National Tax Unit.”
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Foreign National Tax Unit (UB)
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