Federal Income Tax:
The U.S. government taxes earned income as well as income from investments and other sources. There are many rules and regulations dealing with Federal Income Taxes as they relate to non-residents. There are many Federal Tax Treaties with the U.S. and other countries. For a list of the current treaties log onto the Penn State GURU System.
FICA / MEDI:
FICA or Social Security taxes are normally withheld from everyone's pay. However, F-1 and J-1 Visa holders, in many cases, are exempt from this tax. Also, as of July 2, 2000, students who meet certain criteria are also exempt from this tax. FICA tax is not affected by any other provisions of any of the Federal Income Tax Treaties. FICA tax is currently withheld at 6.2% and the MEDI tax is withheld at 1.45%.
State Income Tax:
Beginning January 1, 2004 current state tax is withheld at 3.07%. The State of Pennsylvania does not recognize or honor any tax treaty in regard to exemption from state income tax.
Local Wage Tax:
The local wage tax percentage varies within the County and throughout the State of Pennsylvania. An individual is taxed at the rate the municipality they live in requires to be withheld. Non-residents may apply for a partial refund by contacting their local taxing authority and presenting evidence of non-residency such as a valid passport with an I-94 card.
Year-End Tax Documents
The W2 form is provided to all employee's who have been paid through the Penn State Payroll system and have had taxes withheld.
The fellowship Statement is issued to individuals who have had a fellowship appointment. This type of appointment does not require taxes to be withheld at the time it is issued, however, it may be taxable at tax filing time.
The 1042S form is issued to only Non-Resident students or employee's. This form for students could represent money they were given as a scholarship or fellowship through the student system. The other purpose of a 1042S form for students and employee's would be to provide the dollar amount an individual was paid that was federal tax exempt due to a tax treaty with their country and the United States.