Foreign National Taxation – Cross Match between Taxation and Immigration. Jennifer Trivette, CICA. NC Office of State Controller. Session Etiquette. Please turn off all cell phones. Please keep side conversations to a minimum.
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Jennifer Trivette, CICA
NC Office of State Controller
The information within this presentation does not constitute legal advice and each participant should seek his/her own counsel in addressing specific situations. The NC Office of the State Controller is providing this content to enhance the knowledge of the participants in this workshop. Information presented is not intended to be used for the purpose of avoiding any penalties that may be imposed on an institution by the Department of Homeland Security or Internal Revenue Service.
Establishing effective policies and procedures to comply with government requirements:
Types of Taxable Income
Different offices process different payments - this is why it’s important to build good relationships with all departments involved with paying and processing foreign nationals at your institution or agency.
Examples of Status Violations:
Best practices in making payment to non-resident Aliens (NRAs)
What is a Tax Assessment?
The process of collecting a COMPLETE and ACCURATE immigration history in order to determine taxation and necessary documentation.
Importance of the Tax Assessment
Per IRS Publication 515,
“if you cannot reliably associate a payment with valid documentation you must apply certain presumption rules or you may be liable for tax, interest, and penalties. If you comply with the presumption rules you are not liable for tax interest and penalties even if the rate of the withholding that should have been applied based on the payee’s actual status is different from that presumed.”
It is better to tax and have those taxes refunded by the IRS to the individual, than to not tax at all and face penalties and fines.
What is permissible? I-9 vs. Taxation
Documentation (generally) required for payments:
– Passport (Some passports will have more than one page)
– I-94 card (Small index looking card with entry date stamped on it. A foreign
national CAN NOT legally work without this card.)
– Approval notice
Nonresident Alien Tax Status
– 8233 (If applicable)
Resident Alien Tax Status
IRS REQUIRES ORIGINAL SIGNED TAX DOCUMENTS
Performing a Tax Assessment
Good Questions to ask:
Review the immigration information:
Completed the tax assessment, next step:
A change in visa status
can change everything!
Changes to be aware of:
What if the foreign national cannot obtain a Social Security Number or ITIN?
Section 117 of the Internal Revenue Code taxes scholarship and fellowship grants for items that are not qualified (nontaxable). Although scholarship and fellowship grants for which no services are required are not reportable to US citizens and resident aliens, the recipient may nevertheless be subject to income taxes on the grant. Taxable scholarship and fellowship grants paid to or on behalf of nonresident alien recipients, however, are subject to withholding and reporting unless a tax law or treaty exception applies.
Cannot use a “a one size fits all” approach.
Tax Status: NRA or RA
The importance of the tax treaty and what YOUR signature means.
Documentation required for payments:
Documentation required for payments:
When is the last time you audited your foreign national
Foreign national tax compliance is an important service to your university……
You are the last line of defense!