Foreign National Employee Information

Current tax requirements, and the documents and forms required by the Penn State Payroll Office for all Penn State Foreign National employees are listed below.

Taxes (FICA/MEDIA, Federal, State, Local)

Federal Income Tax:

Federal Income Tax is withheld according to the Federal graduated tax tables located in IRS Publication 15-T.  PSU,  uses the Percentage Method for federal income tax withholidng, using the Annual calculation, in conjunction with the information provided by the employee on their IRS W-4.  The Internal Revenue Service (IRS) requires all Non-Resident Aliens (NRA) to use IRS Notice 1392 instructions to complete the IRS W4 Employee’s Withholding Certificate (referred to as Federal Tax Elections during onboarding in Workday).  Excerpt from Notice 1392: Step 1(c): Personal Information. Check the Single or Married filing separately box regardless of your actual marital status. 

Federal Income Tax Treaty

A Foreign National employee may qualify to be exempt from federal income tax if there is a tax treaty with the U.S. and their country of  permanent residence. The tax treaties vary by Country in the dollar amounts and number of eligibility years. Not all countries have a tax treaty that allows exemption from federal income tax, as well as, not all individuals qualify for the tax treaty benefit. To apply for the tax treaty benefit the individual must complete Form 8233 (8233 IRS Instructions) and the Revenue Procedure Form 87-8 for students or trainees, or Revenue Procudure form 87-9 for teachers and researchers, each calendar year. The form is reviewed in the Payroll Office and then forwarded to the IRS for final approval. It is the responsibility of the individual employee to make sure the forms are completed each calendar year of eligibility.

Pennsylvania State and Local City Tax: 

All employees at Penn State University have the local City tax and State of Pennsylvania taxes withheld. After the calender year is over, they may file a tax return to request a refund or a partial refund. The determination of any refund is made by the local City tax office for City tax and the State of Pennsylvania for the State taxes.

OASDI(FICA)/MEDI Taxes:

are based on your USA residency status for federal tax purposes (Exempt or not Exempt from 'counting days' for the SPT). Refer to the IRS Substantial Presence Test for complete instructions to determine US tax residency.

OASDI (FICA)/MEDI Taxes for F-1 and J-1 students that are in Non-Resident Alien (NRA) Status for US federal tax purposes, are not withheld for five calendar years or any part of five calendar years beginning with their very first date of arrival on a F or J visa into the USA (NRA Rule 3121(b)(19)). When the student reaches the sixth year this tax will be withheld (unless they meet the criteria for the student exemption that became effective July 1, 2001 Student Rule 3121(b)(10)). To determine when the OASDI (FICA)/MEDI tax will begin to be withheld, you need to know the month and year the person first entered the U.S.on a F or J  visa. Note: If the individual was in the U.S. for one day of a calendar year, that entry day will count as an entire calendar year.

Example: Enter U.S. December 20, 2017 on an F-1 visa.  The first tax year would be 2017, second year 2018, third year 2019, fourth year 2020 and the fifthand the last year of exemption would be 2021. Therefore, beginning with January 2021 the OASDI(FICA)/MED tax would be withheld.

OASDI(FICA)/MEDI Taxes for J-1 non-students that are in Non-Resident Alien (NRA) Status for US federal tax purposes(arriving in the USA for the first time), are not withheld for two calendar years or any part of two calendar years, beginning with the very first date of arrival to the U.S.   When the individual remains in the U.S. for year three they will begin to have this tax withheld. To determine when the FICA/MEDI tax will begin to be withheld you need to know the month and the year the person entered the U.S.  Note: If the individual was in the U.S. for one day of a calendar year, that entry day will count as an entire calendar year.

Example: Enter U.S. for the first time on October 20, 2019.The first calendar year would be 2019 and the second calendar year would be 2020. Therefore, beginning with January 2021 the FICA/MEDI tax would be withheld.

NOTE:

J-1 non-student visa holders have a 6 year 'look back period' to determine if the person had been in the US with an Exempt year status.  In the example above, the person is arriving in the US for the very first time,(has never been to the USA) therefore the 6 year look back period  would not have any Exempt year history.

DOCUMENTS and FORMS REQUIRED
Employee Status Documents Required
F-1 VISA HOLDER (student)
- Alien Information Request Form (original)
- Photocopy of most recent  I-94 Document
- Form 8233 (if from a tax treaty country)
- Revenue Procedure Form 87-8 
J-1 VISA HOLDER (student)
- Alien Information Request Form
- Photocopy of most recent  I-94 Document
- Copy of most recent DS-2019
- Form 8233 (if from a tax treaty country)
- Revenue Procedure Form 87-8 
F-1 or J-1 VISA HOLDER
Practical Training Students
- Alien Information Request Form (original)
-  Photocopy of most recent  I-94 Document
J-1's also provide a copy of the most recent DS-2019
PERMANENT RESIDENT - Alien Information Request Form (original)
- W-9 Form if applicable (Resident for US Tax Purposes)
J-1 VISA NON-STUDENT 
- Alien Information Request Form (original)
-  Photocopy of most recent  I-94 Document
- Copy of most recent DS-2019
- Form 8233 (if from a tax treaty country)
- Revenue Procedure 87-9 
POLITICAL ASYLUM or REFUGEE
- Alien information Request Form (original)
- Photocopy of most recent  I-94 Document
- Copy of EAD card
- W-9 Form if applicable (Resident for US Tax Purposes)
HI-B VISA
-Alien information Request Form (original)
- Photocopy of most recent  I-94 Document
- W-9 Form  if applicable (Resident for US Tax Purposes)