Presented by: Mike Sattin and Steven Truong Payroll Services April - - PowerPoint PPT Presentation
Taxation of Non-Residents Presented by: Mike Sattin and Steven Truong Payroll Services April 25, 2012 Todays Agenda Basic Withholding Concepts Six Qs of NRA Withholding Tax Withholding Obligations Maintenance 2 Payroll
Presented by: Mike Sattin and Steven Truong Payroll Services April 25, 2012
Payroll Services 2 4/27/2012
Basic Withholding Concepts Six Q’s of NRA Withholding Tax Withholding Obligations Maintenance
Payroll Services 3 4/27/2012
Internal Revenue Codes Specific to Nonresidents
§ 1441. Withholding
§ 1441. Withholding of tax on nonresident aliens
§ 1442. Withholding of tax on foreign corp.
§ 1443. Foreign tax-exempt organizations
§ 1444. Withholding on Virgin Islands source income
§ 1461. Withholding Tax on Foreign Persons with U.S. Source Income
Basic Withholding Concepts
Payroll Services 4 4/27/2012
California Code – Revenue & Taxable Code
§ 18661-18667 General Rules § 17951-17955 Non-resident specific rules
For employees who are nonresidents of California and work out of California, we need to apply the relevant state laws in which the employee works.
Basic Withholding Concepts
Contact: Jeremy Henmi 310-794-0834
Payroll Services 5 4/27/2012
Anyone who has control, receipt, custody,
disposal, or payment of income to a foreign person
Responsibilities include:
Liable for any required withholdings Required to withhold at the time the payment is
being made or determined
Required to remit taxes to IRS at a particular
schedule
Required to file tax returns and issue tax statement
for payments to non-residents for tax purposes
Basic Withholding Concepts
Payroll Services 6 4/27/2012
Type of Tax Contact Phone Number
592B – CA income tax
for non-employees
Shirley Sams 310-794-0197
Federal income tax Employment tax
Aurora Orozco 310-794-8728
Basic Withholding Concepts
Payroll Services 7 4/27/2012
(3 paying systems)
Income tax
Federal California Other State
Employment tax
Social Security & Medicare
Payroll Services 8 4/27/2012
1.
What do we need to know about NRA tax?
2.
Who is subject to withholding?
3.
Which payment is subject to withholding?
4.
When are payments subject to withholding?
5.
Who is required to withhold?
6.
How much tax should we withhold?
Payroll Services 9 4/27/2012
There exists in the U.S. Two distinct tax
systems under IRC - each having it’s own withholding and reporting rules that payers are liable for.
There is a system for U.S. Persons and
NRA withholding applies only to payments
made to a “foreign person”.
Six Q’s of NRA Withholding
Payroll Services 10 4/27/2012
A “foreign person” includes:
A nonresident alien for tax purpose A foreign corporation, foreign partnership, foreign,
estate, foreign trust
And any other person who is not a US person.
A FOREIGN PERSON
For the remainder of the class, a foreign person will be referred to as a NRA
Six Q’s of NRA Withholding
Payroll Services 11 4/27/2012
A citizen or resident of the United States A partnership or corporation created or
Any estate or trust other than a foreign
estate or foreign trust
Any other person that is not a foreign
person
(2. Who is Subject to NRA Withhold? Cont.) Six Q’s of NRA Withholding
Payroll Services 12 4/27/2012
Any payment is subject to NRA withholding if it is from sources within the United States, and it is either:
Fixed or determinable annual or periodical (FDAP)
income
(Service Payments, Fellowship/Scholarship, Payroll, etc.)
Income from the disposition or sale of personal
property
Six Q’s of NRA Withholding
Payroll Services 13 4/27/2012
All payments are considered taxable income with the exception of:
I.
Foreign Sourced Income – Not reported/Not taxed
II.
Excluded under IRS Code – Not reported/Not taxed
III.
Excluded under Tax Treaty – Not Taxed
Six Q’s of NRA Withholding
Payroll Services 14 4/27/2012
I. Foreign Sourced Income Exemption (Not reported/Not taxed)
Sourcing Payment is important!
A U.S. Person is subject to U.S. tax on Wo
Worl rldwide wide income.
A NRA for tax purposes is subject to U.S. tax on
U. U.S. sou
rced ed income
A NRA for tax purposes is not subject to U.S. tax
ign n sou
ed income
Six Q’s of NRA Withholding
Payroll Services 15 4/27/2012
F.
Section 893 – employee of foreign government
Six Q’s of NRA Withholding
Payroll Services 16 4/27/2012
Section 117
if the payment is for a Qualified Scholarship:
A qualified scholarship is any amount received by an individual as a scholarship or fellowship grant that is used for tuition and fees required for enrollment and required books, supplies, and equipment.
Six Q’s of NRA Withholding
Payroll Services 17 4/27/2012
the payment is made under a cafeteria plan:
This allows the employer contributions for health, dental, and vision benefits to be excluded from gross income!
Six Q’s of NRA Withholding
Payroll Services 18 4/27/2012
Accountable Plan
Can be excluded from income taxes if properly
accounted for i.e. substantiate business within 60 days and delineate expenses
Travel Expense Employee – Business expenses
Payroll Services 19 4/27/2012
The general withholding rate of 30% will not apply if the payment is exempt under an income tax treaty between the individual’s country of residence and the U.S.
Six Q’s of NRA Withholding
US Treasury Tax Treaty Articles Foreign Country
Payroll Services 20 4/27/2012
Withholding is required at the time you
make a payment of an amount subject to withholding
A payment is made to a person whether or
not that person realizes there is an actual transfer of cash or other similar aspect i.e. imputed income.
Six Q’s of NRA Withholding
Payroll Services 21 4/27/2012
At UCLA, Payroll Services acts as the withholding agent for purposes of NRA tax reporting obligations to the IRS. Three central departments on campus have the responsibility to withhold the tax and report this information to Payroll Services.
The Withholding Agent
Six Q’s of NRA Withholding
Payroll Services 22 4/27/2012
ACCOUNTS PAYABLE
Process Non-Employee Payments
One Time Payments Lecture Fee Honorariums
For Travel Office
Travel Expenses Relocation Costs
YEAR END FORM 1099 and 592B
PPS
Withholds taxes
BAR
YEAR END FORM
Informational Statement
PAYROLL
to Employees
Docs
YEAR END Process CREATES FORMS W2 and1042S 1042S for BAR & PAC
GRADUATE DIVISION
Process Fellowship/Scholarship Awards Includes student travel Bruin Buy
Six Q’s of NRA Withholding
Payroll Services 23 4/27/2012
Six Q’s of NRA Withholding
Payroll Services 24 4/27/2012
Wages paid to a NRA employee Fellowship/Scholarship payments to a NRA Tax Treaty Exemptions
Six Q’s of NRA Withholding
Payroll Services 25 4/27/2012
F.
Other payments:
1. Death Payments 2. Pension Payments 3. Awards 4. Relocation
Tax Withholding Obligations
Payroll Services 26 4/27/2012
NRA working out of U.S. NRA working in U.S. NRA working out of California
Tax Withholding Obligations
Payroll Services 27 4/27/2012
* See current tax tables @ www.payroll.ucla.edu
Tax Withholding Obligations
Payroll Services 28 4/27/2012
Re Resid ident ents s ma may y choo hoose se an any y al allo lowances ances on n the he W-4! 4! Cau aution: ion: As s lo long ng as as the hey y me meet et the heir ir tax ax li liab ability lity at at ye year ar end nd
Resident with Tax Treaty
Federal Withholding
State per DE 4
W2 and a 1042S
All Others Residents
Federal & State Based on DE 4
W2
Tax Withholding Obligations
Payroll Services 29 4/27/2012
NRA for tax purposes*
GLACIER generated W-4 and DE 4 (Payroll Services
is office of record)
Access to forms available @ www.online-tax.net
Residents for Tax Purposes*
GLACIER generated W-4 (Department is office of
record)
Access to forms available @ www.online-tax.net UC W-4/DE 4 Fill-in Form is available @
www.ucop.edu/ucophome/cao/paycoord/ucw4-de4.pdf
Employee may update record at “At Your Service Online”
*All foreign nationals are required to have a GLACIER record excluding Permanent Residents, Refugees and Asylees.
Tax Withholding Obligations
Payroll Services 30 4/27/2012
Departments must ensure an “Initial GLACIER
Online Entry Form” is submitted then the employee will indicate the number of exemptions per IRS code and to adhere to regulations as provided by GLACIER
NRA’s who do not provide a form or provide an
incomplete form must be withheld at single status, zero exemptions.
Incomplete forms include those without a SSN. GLACIER generated withholding forms must be
sent to the Payroll Office and withholding will then be updated
Tax Withholding Obligations
Payroll Services 31 4/27/2012
Nonresident from: Canada, Korea, or Mexico Residents from American Samoa
All Others Nonresidents Nonresident with Tax Treaty
Federal Withholding
State per DE 4 State - W2 Federal - 1042S Federal Withholding :
for self, 1 for spouse, and 1 for each dependent State per DE 4 Federal Restricted to:
State per DE 4
W2 - reports Federal and State info Federal 1040NR or 1040NR-EZ State 540* or 540NR or 540NREZ
Nonresident works & lives outside the US
No tax deduction No reports, No filing
Nonresident Students from India
Federal Withholding
allowance for spouse and dependent if requirements are meet. State per DE 4
Tax Withholding Obligations
Payroll Services 32 4/27/2012
Joe Bruin uin
Non-residents: Limited to Single Marital Status. Non-residents: Limited to One allowance unless:
India student
State Status and Allowances – whatever will meet the tax liability
UC W-4NR/DE 4
Tax Withholding Obligations
OBSOLETE OLETE FOR R UCLA LA MUST T PROVIDE OVIDE: GLACIER ACIER GENE NERA RATE TED FORMS RMS
SSN is required. Otherwise, the allowances are = 0 2010
Payroll Services 33 4/27/2012
Wages paid to an NRA working in the US as
an employee are subject to graduated withholding in the same way as U.S. citizens/ residents unless exempted by a tax treaty.
Payment for U.S. sourced personal services is
taxed as the previous chart shows.
Tax Withholding Obligations
Payroll Services 34 4/27/2012
Wages earned by nonresident aliens for
services performed out utside side of the United States are fore reign ign sourced urced incom
.
The wages are not subject to reporting or
withholding of federal or state income tax.
The wages are not subject to FICA tax There are special codes in PPS to facilitate
this.
Tax Withholding Obligations
Payroll Services 35 4/27/2012
Foreign Sourced Income Statement
Hermion mione e Black ck
www.tax.ucla.edu/
Submit Foreign Sourced Income Statement when a nonresident employee is working and living outside
Form UPAY 830. Tax Withholding Obligations
4/25/12 Hermion mione e Black Staf aff Resear arche cher
Payroll Services 36 4/27/2012
Withholding Form for a NRA working out of U.S.
Hermione ne Black
123 45 6789
www.payroll.ucla.edu/ Note Special Coding on allowance fields. This coding prevents the system from withholding and reporting to the IRS and state of California. Tax Withholding Obligations
2012
4/25/2012 Payroll Services 37 4/27/2012
There are no California imposed restrictions on
the number of allowances an employee can choose on their DE 4 Form.
State withholding (for employees) is based on
information from the DE 4 form.
Income earned while living and working in
California is subject to withholding
Income earned outside California may also be
subject to withholding in the other state.
Tax Withholding Obligations
Payroll Services 38 4/27/2012
Resident W-4 Form
The Social Security number is a must have. If an employee completes the form without a SSN, the IRS considers the W- 4 to be invalid and the employee is restricted to marital status S and 0 allowance
Tax Withholding Obligations
Bear Brown 123 45 6789 State status and allowance – whatever will meet the tax liability
2012
4/25/12 Payroll Services 39 4/27/2012
Payroll Services 40 4/27/2012
1. Employees who are residents of California and work
2. Employees who are non-residents of California and work in California.
3. Employees who are non-resident of California and work
working in.
Tax Withholding Obligations
Payroll Services 41 4/27/2012
STATE INFORMATION
List of States which require state tax withholding from income earned while an individual is living and working in that particular state. It also shows the withholding certificate requirements for each state.
STATE CODE REQUIRES WITHHOLDING WITHHOLDING CERTIFICATE REQUIREMENTS
Alabama AL Yes Form A-4 Arkansas AR Yes Form AR4EC Connecticut CT Yes Form CT W-4 District of Columbia DC Yes Form D-4 Georgia GA Yes Form G-4/G4-E Hawaii HI Yes Form HW-4 Illinois IL Yes Form Il-W4 Indiana IN Yes Form WH-4 Kentucky KY Yes Form K-4 Louisiana LA Yes Form L-4, L-4A, or L-4E Maryland MD Yes Form MW 507 Michigan MI Yes Form MI-W4 Mississippi MS Yes Form 62-420 Missouri MO Yes Form MO W-4 New Jersey NJ Yes Form NJ-W4 New York NY Yes Form IT-2104 or IT-2140E North Carolina NC Yes Form NC-4 or NC-4A Ohio OH Yes Form IT-4 Virginia VA Yes Form VA-4 West Virginia WV Yes Form IT-104 Wisconsin WI Yes Form WT-4 Tax Withholding Obligations
Payroll Services 42 4/27/2012
STATE INFORMATION
List of states which require (UC Version) Federal W4 Form.
STATE CODE
REQUIRES WITHHOLDING
WITHHOLDING CERTIFICATE REQUIREMENTS
Arizona AZ Yes Federal W-4, must use UC version California CA Yes “ Colorado CO Yes “ Delaware DE Yes “ Idaho ID Yes “ Iowa IA Yes
Federal W-4, must use UC version but indicate “IOWA” on form
Kansas KS Yes Federal W-4, must use UC version Maine ME Yes “ Massachusetts MA Yes
Federal W-4 must use UC version. When claiming exempt use M-4
Minnesota MN Yes
Federal W-4, must use UC version but indicate “Minnesota” on form
Montana MT Yes Federal W-4, must use UC version Nebraska NE Yes “ New Mexico NM Yes “ North Dakota ND Yes “ Oklahoma OK Yes “ Oregon OR Yes “ Pennsylvania PA Yes “ Rhode Island PR Yes “ South Carolina SC Yes “ Utah UT Yes “ Vermont VT Yes “
List of States that don’t require state tax withholding: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Tax Withholding Obligations
Payroll Services 43 4/27/2012
Obtain this form from the Payroll Services web site http://www.payroll.ucla.edu/forms/f
Tax deduction must be cancelled
UPAY 830 –
Out of state Income tax withholding form
Bea A Bizzy zy
Payroll Services 44 4/27/2012
1 997
Sirias as Black
Black, Sirias 123456789 03 16 11 67-67 Burns Street 123 45 6789 11 25 69 New York, NY 11375
http://www.ucop.edu/ucophome/cao/paycoord/taxation.html
4/25/12
Note Special Coding on state
Prevents the system from Withholding and reporting To the state of California. There may be liability in the State work is performed
May only choose 997 If a complete UPAY830 Is submitted
2012
S
Use of the appropriate version of the W-4 (W-4/DE
the residency status of the employee.
Tax Withholding Obligations
Payroll Services 45 4/27/2012
Remember to change slide # for actual printing of handouts
Tax Withholding Obligations
Payroll Services 46 4/27/2012
The current rates of withholding are:
Full FICA OASDI 4.2% Medicare 1.45% Safe Harbor DCP CAS 7.5% Medicare 1.45%
Tax Withholding Obligations
Payroll Services 47 4/27/2012
IRC allows for exemption from FICA if:
PAYROLL OFFICE CONTACT IS Lola Espinoza @ 794-8724 UCLA does not honor Totalization Agreements*
Tax Withholding Obligations
* Exception is Canada
Payroll Services 48 4/27/2012
Tax Withholding Obligations
Payroll Services 49 4/27/2012
Independent Personal Services are services
provided to a no non-employ employee. ee. Typical payments include:
There is no required withholding form.
Tax Withholding Obligations
Payroll Services 50 4/27/2012
Independent Personal Service Payments
Income Code 16
Federal Withholding Independent Personnel Payments are taxed at the rate of 30% of gross payment unless the visitor is eligible for a tax treaty State Withholding Independent Personnel Payments that annually total greater than $1500 are taxed at the rate of 7% of gross payment unless the visitor is a nonresident of California.
Tax Withholding Obligations
Payroll Services 51 4/27/2012
Tax Withholding Obligations
Payroll Services 52 4/27/2012
APM390 was revised to mandate
departments to pay for the cost of benefits to individuals with title codes of:
3252 - Post Doc Employee 3253 - Post Doc Fellow Recipient 3254 – Post Doc Paid Direct
The revised policy set up a taxable situation
Tax Withholding Obligations
Must have the same paperwork as an employee
Payroll Services 53 4/27/2012
Employer paid benefits for post doctoral employees are
not taxable because the benefits are exempted by the Code Section 125. Title codes 3252 and 3240. [Income Code 17 & 18]
Payments of benefits by the employer for the non-
employee post doctoral titles however are taxable. Title Codes 3253 and 3254 [Income Code 15]
As you have learned, UCLA is only required to report and
withhold for payments to NRA’s. For the NRA’s, the value
Tax Withholding Obligations
Contact Payroll Services 310-794-0784
Payroll Services 54 4/27/2012
A GLACIER generated IRS FormW-4 will be required. Since the income is being classified as a fellowship payment,
rates attributed to that income will be applied. Fede deral ral Tax x Rate ates:
14% to NRAs with “F,” “J,” “M,” or “Q” status. 30% to all others 0% if tax treaty eligible
Califo iforn rnia ia Tax Rate ate – no withholding
uired
Tax Withholding Obligations
Payroll Services 55 4/27/2012
Tax Withholding Obligations
Payroll Services 56 4/27/2012
A scholarship or fellowship grant is an amount given to an individual
for study, training, or research, and does not constitute compensation for personal services.
Whether a fellowship grant from U.S. sources is subject to NRA
withholding depends on the nature of the payments and whether the recipient is a candidate for a degree. Candidate for a degree.
No withholding required from a qualified scholarship from U.S.
sources – Section 117 exclusion.
A non-qualified scholarship is subject to NRA withholding. The withholding rate is 14% paid to nonresident aliens present in the
Payments made to nonresident alien individuals in any other
immigration status are subject to 30% withholding.
Tax Withholding Obligations
(Gift Award) (Research Award)
Payroll Services 57 4/27/2012
Non-degree candidate (post Docs).
Must withhold on the total amount of the scholarship.
In order to use the reduced 14% rate, the following must be true:
Must be present in the U.S. in “F,” “J,” “M,” or “Q” nonimmigrant status, The grant must be for study, training, or research at an educational
The grant must be made by:
A tax-exempt organization operated for charitable, religious, educational, etc. purposes,
A foreign government,
A federal, state, or local government agency, or
An international organization, or a binational or multinational educational or cultural organization created or continued by the Mutual Educational and Cultural Exchange Act of 1961 (known as the Fulbright-Hays Act).
If the grant does not meet above requirements, withholding tax rate is 30%.
Tax Withholding Obligations
Payroll Services 58 4/27/2012
Fellowship/Scholarship rates are as follows: Feder eral al tax rates are:
0%if tax treaty eligible
14% to NRAs with “F,” “J,” “M,” or “Q” status. 30% to all others
Califor iforni nia a tax wit ithholding
is 0 0.
Tax Withholding Obligations
Payroll Services 59 4/27/2012
TAX TREATMENT OF FELLOWSHIP/SCHOLARSHIP PAYMENTS
AWARD
Fellowship / Scholarship Payments QUALIFIED ALIFIED Books, Tuition, and required fees
Degree Candidate Non-Degree Candidate
Not Taxable/ Not Reportable
Post Docs Undergraduates
1042S
UN UN-QUALI QUALIFIE FIED Room and Board Travel ( for student benefit) Equipment Research, teaching or other service
1042S 1042S 1042S *
1042S 1042S 1042S 1042S 1042S *
*if Tax Treaty
Tax Withholding Obligations
Payroll Services 60 4/27/2012
Tax Withholding Obligations
Payroll Services 61 4/27/2012
Generally, the following are NOT REQUIRED when reimbursing travel expense to a nonresident alien
REASON:
the payment is Not subject to tax Withholding or reporting
Tax Withholding Obligations
Payroll Services 62 4/27/2012
Travel Expenses
Reimbursement for the travel expenses of
a nonresident alien are not reportable to the IRS and are not subject to NRA withholding if the payments are made under an accountable plan (Sec.62)
This treatment applies only to the
payment of travel and lodging expenses.
Tax Withholding Obligations
Payroll Services 63 4/27/2012
Death Cases
Taxability depends if the payment is made in the year of
death or in the year after death.
Immigration fees
Taxability depends on the type of fees being paid and
the status of the visa
Not taxable: Employer related (sec.62) normal business expense Permanent Resident fees may be taxable. It depends if the
expense is critical to the mission of the University.
Retirement
Taxability depends on where the pension is earned.
UCOP and Fidelity
Tax Withholding Obligations
Payroll Services 64 4/27/2012
A t A tax ax tre reaty aty is s a pr a privil vilege, ege, not t a a ri right ht
Tax Withholding Obligations
IRC section 1461 makes UCLA accountable for tax treaty approval or denial.
Payroll Services 65 4/27/2012
An agreement between the U.S. and another country that allows either a reduced rate of withholdings or complete exemption from federal withholding tax. They are meant to avoid double taxation of income. Each treaty is divided up by articles. The articles describe the terms of each treaty. The United States has tax treaties with 56 countries.
Some states honor the federal tax treaties – California does not!
Tax Withholding Obligations
Payroll Services 66 4/27/2012
Publication 901 has Tax Treaty information
Country
Article Payor Description of Payment Income Code Maximum Presence in US Maximum $$ Received in Calendar Year that can be exempt from federal taxes
China, People’s Rep Of 15 Scholarship or fellowship grant No limit Any US or foreign resident No limit 20(b) 16 Independent personal services 183 days Any contractor No limit 13 20 Public entertainment No limit Any contractor No limit 16 17 Dependent personal services 183 days Any contractor No limit 14 18 Teaching 3 years U.S. educational or research instit. No limit 19 19 Studying and Training Remittance or allowance No limit Any foreign resident No limit 20(a) Compensation during training
Available at IRS web site (www.irs.gov) - Publication Section (Pub. 901)
Tax Withholding Obligations
Payroll Services 67 4/27/2012
Current tax treaty provisions recognized at UCLA (by type of income)
Dividends – Income Codes 5, 6 Royalties - Income Codes 10, 11, 12 Fellowship/Scholarship - Income Code 15 Independent Personal Service - Income Code
16
Employment - Income Code 18 Student Employment - Income Code 19 Performer – Income Code 20 Other – Income Code 50 (death payments)
Tax Withholding Obligations
Payroll Services 68 4/27/2012
1.
A tax treaty article must exist between the US and country of residence of the visitor and have a corresponding article.
2.
The visitor must be a resident of the tax treaty country and a nonresident of US* unless otherwise allowed by tax treaty.
3.
Primary purpose of visit and actual job must meet the tax treaty.
4.
Time and $$$ constraints must be met.
5.
Required to have a tax payer ID# - SSN, EIN, ITIN
6.
Must complete appropriate paper work.
Tax Withholding Obligations
Payroll Services 69 4/27/2012
Exception to Non-Residency Requirement
Generally, only non-residents for tax purposes
are eligible for a tax treaty exemption. Exception Clause A visitor (who meets the provisions of their tax treaty article) who becomes a resident for tax purposes may continue to claim the exclusion from income if their country’s tax treaty contains a provision to do so LET PAYROLL DETERMINE THIS FOR YOU
Tax Withholding Obligations
Payroll Services 70 4/27/2012
10/5/10
12/31/10
Non-Resident
1/1/11
12/31/11
Non-Resident
1/1/12 09/10/12
Resident for tax purposes John Pierre entered the U.S. on October 5, 2010 for the very first time. He planned to teach at UCLA until September 10, 2012 on a Research/ Scholar J1 visa.
10/4/11 1st year tax treaty eligibility 2nd year tax treaty eligibility RESIDENCY
2010 -Non-resident for tax purposes 2011 - Non-resident for tax purposes 2012- Resident for tax purpose Tax Treaty 1st year : 10/5/10 – 10/4/11 2nd year : 10/5/11 – 10/4/12
Tax Withholding Obligations
Payroll Services 71 4/27/2012
GLACIER Generated Forms:
Depends on type of Payment Generally the following document for tax treaty
eligibility is required:
8233 or IRS W-8BEN or W-9
Tax Withholding Obligations
Payroll Services 72 4/27/2012
PAPER WORK REQUIREMENTS
Employment
Non-Employment
Independent Personnel Services Non Services Payments: Royalties, Dividends Travel Fellowship/ Scholarship Residency Determination GLACIER GLACIER GLACIER GLACIER Documentation
Required unless sourced
Required unless sourced
Required unless sourced out of US Required Tax Exemption Form GLACIER generated: 8233 or W-9 GLACIER generated Form 8233 GLACIER generated W-8BEN GLACIER generated W-8BEN
Additional Statement GLACIER generated Tax Treaty Statement based on Income Code* GLACIER Honoraria Statement Declaration of Immigration Status by Non- US Citizens
Payroll Services 73 4/27/2012
Tax Withholding Obligations
Payroll Services 74 4/27/2012
Tax Treaty Chart - Income Code 18: This table is for individual whose primary purpose for entering the U.S. is to teach or research.
COUNTRY CODE
PRIMARY PURPOSE ARTICLE LIFE TIME LIMIT
Bangladesh BG 2 years no limit
Teaching or Research 21(1)
Belgium BE 2 years
no limit Teaching or Research 20
Bulgaria BE 2 years
no limit Teaching or Research
China CH 3 years**
no limit Teaching or Research 19
Commonwealth ^^ 2 years no limit Teaching or Research VI (1) Czech REP EZ** 2 years no limit Teaching or Research 21 2 years Egypt EG 2 years no limit Teaching or Research 22 France** FR 2 years no limit Teaching or Research 20 2 years Greece ` GR 3 years no limit Teaching only XII Hungary HU 2 years no limit Teaching or Research 17 India IN 2 years***** no limit Teaching or Research 22 Indonesia ID*** 2 years no limit Teaching or Research 20 2 years Israel IS 2 years no limit Teaching or Research 23 Italy IT 2 years no limit Teaching or Research 20 Jamaica JM *** 2 years no limit Teaching or Research 22 2 years Japan JA 2 years no limit Teaching or Research 19 Korea (south) KS 2 years no limit Teaching or Research 20 Luxembourg**** LU 2 years no limit Teaching or Research XIII Netherlands NL 2 years***** no limit Teaching or Research 21 (1) Norway NO 2 years no limit Teaching or Research 15 Pakistan PK 2 years no limit Teaching only XII Philippines RP 2 years no limit Teaching or Research 21 Poland PL 2 years no limit Teaching or Research 17 Portugal PO** 2 years no limit Teaching or Research 22 2 years Romania RO 2 years no limit Teaching or Research 19 Slovak REP. LO** 2 years no limit Teaching or Research 21(5) 2 years Slovenia SI 2 years no limit Teaching or Research 20(3) 5 years Thailand TH 2 years****** no limit Teaching or Research 23 Trinidad/Tobago TD 2 years no limit Teaching or Research 18 United Kingdom UK 2 years****** no limit Teaching or Research 20 Venezuela VE 2 years no limit Teaching or Research ^^Commonwealth includes: Armenia(AM), Azerbaijan(AJ), Belarus(BO), Georgia(GG), Kyrgyzstan(KG), Moldova(MD), Tajikistan(TI), Turkmenistan(TX), Ukraine (UP), and Uzbekistan(UZ)
In the Aggregate: Visits US in 1998 and 1999, returns to China for a year and comes back to US in 2001 can use the treaty for 2001 Residents of these countries are
1 lifetime tax treaty exemption Retroactive treaties ***Treaty
for payment by sponsor
Must equal purpose of visit and appointment
Tax Withholding Obligations
BE SURE TO USE MOST CURRENT CHART
Payroll Services 75 4/27/2012
CHINA
Example: A resident of China visits the US and takes advantage of the treaty in 2010 and 2012, returns to China for 1 year and comes back to the US in 2012. This visitor still has 2012 to use the treaty GREECE – Most treaties have an eligibility period of 2 years but Greece has a 3 year eligibility period
Tax Withholding Obligations
Payroll Services 76 4/27/2012
Allows the US to tax individuals retroactively to the first day of the tax treaty if presence is 1 day over the maximum period. Countries with a retroactive clause in their treaty are: India, Luxembourg, Netherlands, Thailand, and United Kingdom
Tax Withholding Obligations
Payroll Services 77 4/27/2012
Income Code 18
Some treaties allow only a 1 time application of the treaty. Countries with a one time clause in their treaty are: Czech Republic, France, Indonesia, Jamaica, Portugal, and Slovak Republic
Tax Withholding Obligations
Payroll Services 78 4/27/2012
Income Code 18
Luxembourg is sponsor specific which means that only payments made by the sponsor will be eligible for tax treaty application.
Tax Withholding Obligations
Payroll Services 79 4/27/2012
Begins on the date of entry in eligible status and ends base of the duration of treaty. Can cross tax years Example: Professor Brown enters the U.S. on 10/2/2010 and is eligible for a 2 year
10/2/10 – 10/1/11 – year 1 10/2/11 – 10/1/12 – year 2
Tax Withholding Obligations
Payroll Services 80 4/27/2012
Tax Withholding Obligations
Payroll Services 81 4/27/2012
Tax Treaty Chart Income Code 19
This table lists countries that have a tax treaty with the US for students who receive income for employment Payroll Services determines tax treaty eligibility.
COUNTRY
MAX AMT ARTICLE Bangladesh 2 $8,000.00 21 (1) Belgium 5 years $2,000.00 21 (1) Bulgaria no limit $9,000.00 19 (1)(b) China, Peo.’s Rep no limit* $5,000.00 20 (c) Cyprus 5 years $2,000.00 21 (1) Czech Republic 5 years $5,000.00 21(1) Egypt 5 years $3,000.00 23 (1) Estonia 5 years $5,000.00 20(1) France 5 years $5,000.00 21 (1) Germany 4 years $5000.00 20 (4) Iceland 5 years $2,000.00 22 (1) Indonesia 5 years $2,000.00 19 (1) Israel 5 years $3,000.00 24 (1) Korea 5 years $2,000.00 21 (1) Latvia 5 years $5,000.00 20(1) Lithuania 5 years $5,000.00 20(1) Morocco 5 years $2,000.00 18 Netherlands ** no limit* $2000.00 22 (1) Netherlands 3 year $2000.00 22 (1) Norway 5 years $2,000.00 16 (1) Pakistan no limit* $5,000.00 XIII(1) Philippines 5 years $3,000.00 22 (1) Poland 5 years $2,000.00 18 (1) Portugal 5 years $5,000.00 23 (1) Romania 5 years $2,000.00 20 (1) Slovak Republic 5 years $5,000.00 21 (1) Slovenia 5 years $5,000.00 20 (1) Spain 5 years $5,000.00 22 (1) Thailand 5 years $3,000.00 22 (1) Tobago/Trinidad 5 years $2,000.00 19 (1) Tobago/Trinidad** 5 years $5,000.00 19 (1) Tunisia 5 years $4,000.00 20 Venezuela 5 years $5,000.00 21(1) * Benefits provided extends only for such period of time as is reasonably necessary to complete the education, training, or purpose of visit. ** Must be securing training required to qualify for a professional specialty What happens when max level is reached?
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Additional Information for Student Treaty
Income Code 19
Spain –Article 22 Exemption from federal taxes up to $5,000. This amount must be reduced by the personal exemption
Therefore, the limit of this treaty would be $1,200.00 for year 2012.
China – Article 20 Provides exemption for the period that is reasonably necessary to complete the education of training
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How to determine duration of tax treaty eligibility
Begins on the date of entry in eligible status and ends based of the
maximum presence limit of treaty.
Count the taxable years
Example: Student enters the U.S. on 10/2/2008 and is eligible for a 5 year treaty. The eligible period is: 2008 – year 1 2009 - year 2 Eligibility period 2010 – year 3 10/2/08-12/31/2012 2011 – year 4 2012 – year 5
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Residency for Tax Purposes
Work authorization document I-94 GLACIER generated
documents:
W-4 W-9 Form W-9 Attachment
NRA for tax Purposes
Work authorization
document
I-94 GLACIER generated
documents:
W-4 and DE 4 8233 Form Tax Treaty Statement
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How to complete the form 8233
Refer to: Class Handout
WWW.PAYROLL.UCLA.EDU Payroll Forms; Alien Forms
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This is the completed 8233 form for the tax treaty example.
Must be a SS# From Visa From I-94
Tax Withholding Obligations
2012
Payroll Services 87 4/27/2012 From Income Code 18 Chart
Tax Withholding Obligations
Pierre Payroll 4/25/2012
PAYROLL OFFICE ONLY
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Tax Withholding Obligations
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Independent Personal Service - Income Code 16
This table is to be used for individuals who perform an independent personal service
Tax Withholding Obligations
COUNTRY
$ LIMIT ARTICLE Australia 183 days no limit 14 Austria no limit no limit 14 Bangladesh 183 days no limit 15 Barbados 89 days 5000.00 14 Belgium 182 days no limit 14 (2)(a)(b) Bulgaria no limit no limit 7** Canada no limit no limit XIV China* 183 days no limit 13 Commonwealth 183 days no limit VI (2) Cyprus 182 days no limit 17 Czech Republic 183 days no limit 15 Denmark no limit no limit 14(1) Egypt 89 days no limit 15 Estonia 183 days no limit 14 Finland no limit no limit 14 France 183 days no limit 14 Germany no limit no limit 14 Greece 183 days 10000.00 X Hungary 183 days no limit 13 Iceland 182 days no limit 18 India 89 days no limit 15 Indonesia 119 days no limit 15 Israel 183 days no limit 16 Italy 183 days no limit 14 Jamaica 89 days 5000.00 14 Japan no limit no limit 7** Kazakhstan 183 days no limit 14 Korea (South) 182 days 3000.00 18 Latvia 183 days no limit 14 Lithuania 183 days no limit 14 Luxembourg no limit no limit 15 Mexico 182 days no limit 14 Morocco 182 days 5000.00 14 Netherlands 183 days no limit 15 New Zealand 183 days no limit 14 Norway 182 days no limit 13 Philippines 89 days 10000.00 15 Poland 182 days no limit 15 Portugal 182 days no limit 15 Romania 182 days no limit 14 Russia 183 days no limit 13 Slovak Republic 183 days no limit 15 Slovenia no limit no limit 14 South Africa 183 days no limit 14 Spain no limit no limit 15 Sri Lanka 183 days no limit 15 Sweden no limit no lmit 14 Switzerland 183 days no limit X Thailand 89 days 10000.00 15 Tobago/Trinidad 183 days 3000.00* 17 Tunisia 183 days 7500.00 14 Turkey 183 days no limit 14 Ukraine no limit no limit 14(1) United Kingdom no limit no lmit 7*** Venezuela no limit no limit 14 ^^Commonwealth includes: Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan(, Turkmenistan, and Uzbekistan **Belgium, Bulgaria, Canada, Germany, Iceland, Japan and UK are Business Profits articles.
TAXABLE YEAR
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GLACIER Generated
8233 Tax Treaty Form for most Independent
Personal Payments OR
W-8BEN for Royalty payments and Entities
Tax Withholding Obligations
Contact: Mike Sattin 310-267-5774
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Tax Withholding Obligations
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Tax Treaty Chart - Income Code 15
COUNTRY
$ LIMIT ARTICLE
Armenia* 5 years 9999.99 VI(1) Azerbaijan* 5 years 9999.99 VI(1) Bangladesh no limit no limit 21(2) Belgium**** (pre 2008) 5 years no limit 21(1) Belarus* 5 years 9999.99 VI(1) China, People’s Rep no limit no limit 20(b) Cyprus 5 years no limit 21(1) Czech Republic 5 years no limit 21(1) Egypt 5 years no limit 23(1) Estonia 5 years no limit 20(1) France 5 years no limit 21(1) Georgia* 5 years 9999.99 VI(1) Germany no limit no limit 20(3) Iceland 5 years no limit 22(1) Indonesia 5 years no limit 19(1) Israel 5 years no limit 24(1) Kazakhstan 5 years no limit 19 Korea 5 years no limit 21(1) Kyrgyzstan* 5 years 9999.99 VI(1) Latvia 5 years no limit 20(1) Lithuania 5 years no limit 21(1) Moldova* 5 years 9999.99 VI(1) Morocco 5 years no limit 18 Netherlands 3 years no limit 22(2) Norway 5 years no limit 16(1) Philippines 5 years no limit 22(1) Poland 5 years no limit 18(1) Portugal 5 years no limit 23(1) Romania 5 years no limit 20(1) Russia 5 years no limit 18 Slovak Republic 5 years no limit 21(1) Slovenia 5 years no limit 20(1) Spain 5 years no limit 22(1) Tajikistan* 5 years 9999.99 VI(1) Thailand 5 taxable years no limit 22(1) Tobago/Trinidad 5 years no limit 19(1) Tunisia 5 years no limit 20 Turkmenistan* 5 years 9999.99 VI(1) Ukraine 5 years no limit 20(1) Uzbekistan* 5 years 9999.99 VI(1) Venezuela 5 years no limit 21(1)
* These countries are also known as the Commonwealth Countries. Students of the Commonwealth Countries can only qualify for the IRC Section 117 Exemption or for the Tax Treaty Exemption; whichever is more favorable. ** 5 year limit pertains only to Training or Research. *** No limit for regular university study. 2 year limit for apprentice or business trainee. **** Belgium income code 15 article not renewed in 2008. Only applicable if date of entry is prior to 1/1/08.
Fellowship/Scholarship - This table is for student who receive fellowship/scholarship awards. Payroll Sevices is the campus
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Tax Withholding Obligations
individuals from a country with tax treaty eligibility with the US. The documents include an exemption for fellowship income.
Tax Summary Report cover page GLACIER generated W-8BEN Form - to determine residency
for federal tax purposes *Forms can be obtained from GLACIER*
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Tax Withholding Obligations
Pierre rre Pay ayro roll ll 04 04-25 25-12 12
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The statements provided by UCLA Payroll Service:
W-2: Federal/State Wage & Tax Statement for Employees 1042S: Federal Wage & Tax Statement for non-resident non-employees or employees on a Tax Treaty
The IRS requires withholding agents to provide a statement indicating any income paid to nonresidents and corresponding withholdings.
Accounts Payable provides the 592B Form – Nonresident Withholding Tax Statement for non-resident of California who work as independent contractors in California.
Maintenance
Payroll Services 97 4/27/2012
Reports federal and state taxable earnings and corresponding taxes for
information only. The federal information will be on a 1042S. If you have any questions concerning the contents of any field, please call Aurora Orozco at (310)794-8728.
2011
Maintenance
Note difference between federal and state grosses. Due to pre tax parking.
98 4/27/2012
Reports federal taxable income for all non-employee payments made to non- residents. Reports federal taxable income for non-resident employees who claim a tax treaty. If you have any questions concerning the contents of any field, please call Michael Sattin x75774.
Maintenance
(2011) Payroll Services 99 4/27/2012
Reports California source income for all non-employee who are not- California residents. This form will be issued by Accounts
direct questions to Shirley Sams at (310) 794-0197
2011
2011 Payroll Services 100 4/27/2012
You now have a general knowledge
UCLA tax obligations