NRA Definitions

International Student and Scholar Tax FAQs

9/5/6 Rule - (From Section 431 of the American Competitiveness and Workforce Improvement Act - ACWIA) "(q) Any alien admitted under section 101(a)(15)(B) may accept an honorarium payment and associated incidental expenses for a usual academic activity or activities (lasting not longer than 9 days at any single institution), if such payment is offered by an institution or organization described in subsection (p)(1) and is made for services conducted for the benefit of that institution or entity, and if the alien has not accepted such payment or expenses from more than 5 institutions or organizations in the previous 6-month period."

B-1 Visa, Visitor for Business - Individuals in the U.S. for a short time to engage in business activities such as consulting with business associates, attending and participating in professional conferences, or conducting independent research.  They may NOT engage in employment in the U.S.

B-2 Visa, Visitor for Tourism - Individuals in the U.S. for travel, tourism, or recreation.  They may NOT engage in employment in the U.S.

Business or tourist immigration status and 9/5/6 rule - Honoraria and travel reimbursements may be made to B-2 and W-T visitors only under the 9/5/6 rule. Honoraria may be paid to visitors in B-1 and W-B status only under the 9/5/6 rule. However, travel reimbursements can be made to any B-1 or W-B with original receipts for a reasonable period of time beyond 9/5/6 rule.

Business purpose - Generally, the individual must be providing services either as an employee or independent contractor (honorarium) for the benefit of Emory.  Other items to consider are whether contractual information gives Emory the ownership rights to any discoveries related to research.  -See travel reimbursements for business purpose related to travel.

Compliance Statement -- Emory form used to verify compliance with immigration rules related to honorarium and travel reimbursement paid to visitors in B-1, B-2, WB, WT, and Canadians with no visa. It is also used by Emory to track nonresident alien visits for survey reporting.

Employee Wages -- Employee wages are payments for services that an individual performs or carries out for Emory as an employee. Services performed by an employee are subject to the direction and control of Emory faculty or staff. Employee wages are not the same as payments made to a foreign national for independent contractor services. Employee wages can only be paid to foreign nationals who have been granted an appropriate employment authorization and visa immigration status by U.S. Citizenship and Immigration Services (USCIS) that allows them to be compensated for services.

Federal Insurance Contribution Act (FICA) -- FICA is a tax that is assessed against employee wages paid to individuals. This tax is separate from the federal income tax and Georgia income tax. Monies collected from the FICA tax are used to fund the retirement and medical benefits paid by the Social Security Administration. One half of this tax (7.65% of wages earned) is withheld from the payments to the employee, while Emory pays the other half (7.65% of wages earned). It is important to note that rules regarding FICA tax liability are not the same for every visa classification.

Foreign Source Payment -- Compensation payment to a nonresident alien employee, independent contractor, or other entity where the location of the activity is exclusively sourced outside the US.

Foreign National Information System (FNIS) -- FNIS is a web-based data-entry channel used by Emory to allow nonresident aliens (NRA) electronic means to enter their personal, visa, and immigration status information. After the data is entered into FNIS, submitted to the Administrator, and the submission is approved, the FNIS records are imported into the International Tax Navigator database for the purpose of calculating tax residency and determining treaty eligibility.

Forms

W-7

Application for IRS Individual Taxpayer Identification Number

Needed to receive an ITIN. This number is an alternate for foreign nationals who don't qualify for a SSN but who must file a tax return or wish to claim a tax treaty exemption.

W-8BEN

Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding (For Individuals only)

-Used by students to claim an exemption due to a tax treaty.

-Used by NRAs receiving Foreign Source Payments to establish foreign status.

-Used for honoraria with no SS# to show that number was requested.

1040NR or 1040NR-EZ

U.S. Nonresident Alien Income Tax Return

Nonresident aliens use either of the forms to file an annual tax return if they earned any U.S. sourced income during the year.

1042-S

Foreign Person's U.S. Source Income Subject to Withholding

Issued by Emory and is filed by the foreign national with the IRS to report U.S. taxable income.

8233

Exemption from Withholding on Compensation for Independent Personal Services of Nonresident Alien Individual

Used to claim an exemption due to a tax treaty for compensation (honoraria and wages).

8843

Statement for Exempt Individuals and Individuals With a Medical Condition

NRA in F or J status (including their dependents) must file this form every year he/she is in exempt status even if NRA does not have U.S. income. File by April 15th.

DS-2019

Certificate of Eligibility for Exchange Visitor Status

Issued by the EU. It is used by a foreign national to (1) apply for the J-1 visa at a US consulate overseas for the Exchange Visitor Program or (2) to apply for a change of status from within the U.S., or (3) to authorize transfer to a new program within the U.S.

I-94/I-94W

Emory's ISSS

Arrival-Departure Record

Shows the date the foreign national arrived in the U.S. and the "Admitted Until" date, the date when the authorized period of stay expires. The I-94W is completed by foreign nationals from countries in the Visa Waiver Program.

Form 843

Refund of FICA taxes

Used to claim a refund or request an abatement of certain taxes, interest, penalties, and additions to tax. It is mainly used by NRA to request a refund of FICA taxes.  See Instructions for FICA Refund and Sample Forms.

Green Card -- A green card allows a foreign national to live and work in the U.S. indefinitely as a lawful permanent resident. The official title of the card is "Permanent Resident Card," and as it so happens, the card is not green. The card itself is a government-issued plastic identification card that serves as proof of this permanent resident status. In size and format, it generally resembles a driver's license. It is also known as the I-551 card. A green card is not indicative of citizenship. A green card can be revoked if a person does not maintain permanent residence in the U.S., travels outside the country for too long, or breaks certain laws.

Green Card Test -- If a foreign national has been issued a Permanent Resident Card, also known as a green card (I-551), and the card is still valid, the person is said to have passed the green card test. The right to lawful permanent residence is granted at the time of the final interview with the U.S. Citizenship and Immigration Services (USCIS) or the U.S. Department of State (DOS) officials and can be evidenced not only by the "green card", but also by a stamp in the applicant's passport which states "temporary evidence of lawful permanent status." The "green card" may not be manufactured or mailed for several months after the final interview, and this stamp provides immediate proof of permanent status.

Gross-up -- To "gross up" an amount will usually indicate that if there is a mandatory withholding or deduction, the paying party shall "gross up" the payment so that the receiving party receives the agreed amount which would also equal the net amount. This action calculates and offsets the tax burden associated with income deemed taxable by the IRS.

Honorarium -- An honorarium is generally a payment to an individual possessing recognized professional or scientific credentials that uniquely qualify him or her to be a guest lecturer, speaker, seminar participant or leader. The fee is determined by the sponsoring department and is paid on a voucher prepared by the department rather than on an invoice submitted by the individual performing the service. No admission can be charged at an activity for which an honorarium is paid. The fee is subject to reporting and withholding rules that apply to compensation.

Immigrant -- An immigrant is someone who has made an application or request to reside in the United States indefinitely as a permanent resident alien. An immigrant may also be referred to as a green card holder, resident alien, or permanent resident. An immigrant has the same rights and obligations as a U.S. citizen with the exception of voting and holding certain public offices.  Immigrants are taxed on their worldwide income and in the same manner as a U. S. citizen.

Income Tax Treaties -- Treaties are negotiated by the U.S. Treasury Department and the benefits in each one are unique to each country. The primary purpose of a tax treaty is to avoid double taxation. The treaty benefit typically eliminates or reduces the tax owed by the nonresident alien to the U.S. government. IRS paperwork must be completed, and the individual must have a tax identification number in order to claim any benefit that applies. A foreign national can claim a tax treaty benefit if he or she is a resident for tax purposes of that country. A foreign national cannot claim tax treaty benefits of the country of birth if he or she is not also a resident for tax purposes. For example, a citizen of Germany who is a resident for tax purposes in Italy can't claim tax treaty benefits from the German treaty.

Income Tax Treaty Benefits for Compensation and Scholarship Payments -- Elimination or reduction of federal and state withholding taxes for a specified time from payments made to nonresident aliens (employees, independent contractors, students/scholarships) as a result of an income tax treaty entered into between the US and the home government of the nonresident alien.

Independent Contractor Payments -- Payment to an individual possessing professional or scientific knowledge that qualifies him/her to be a guest speaker, seminar participant, or participate in similar educational activity. NRA cannot be acting as an employee of Emory.

Individual Taxpayer Identification Number (ITIN) -- An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. It is a nine-digit number that always begins with the number 9 and has a range of 70-88 in the fourth and fifth digit. Effective April 12, 2011, the range was extended to include 900-70-0000 through 999-88-9999, 900-90-0000 through 999-92-9999 and 900-94-0000 through 999-99-9999. ITINs are issued to individuals who are required to have a U.S. taxpayer identification number but who are not eligible to obtain a SSN from the Social Security Administration (SSA). ITINs are issued regardless of immigration status because both resident and nonresident aliens may have U.S. tax return and payment responsibilities under the Internal Revenue Code.  Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN, unless they meet an exception.

Nonresident Alien for Immigration Purposes -- A nonresident alien for immigration purposes is a person who is not a U.S. citizen or permanent resident of the U.S. and who has been admitted for a temporary stay that will end when the purpose of that stay has been met.

Nonresident Alien for U.S. Tax Purposes -- A nonresident alien for U.S. tax purposes is not a U.S. citizen and does not meet either the "green card" test or the "substantial presence" test. A nonresident alien for tax purposes, during his or her stay in the U.S., either pays U.S. taxes only on income from sources inside the U.S.; or is exempt from paying U.S. income taxes because of a treaty between the U.S. and the government of his or her country of tax residency. Most nonresident aliens receive no tax exemption for dependents. A nonresident alien for tax purposes must file an income tax return using IRS Form 1040NR or Form 1040NR-EZ on or before April 15th. NOTE: Categories established for immigration purposes do not necessarily coincide with those created for tax purposes. Under certain circumstances, a nonresident alien for immigration purposes may be a resident for tax purposes. It is very important for students and scholars who are not citizens of the US to understand whether they are resident or nonresident aliens for tax purposes.

North American Free Trade Agreement (NAFTA) or Trade NAFTA -- The North American Free Trade Agreement (NAFTA) permits certain Canadian and Mexican professionals to enter the U.S. to work for U.S. employers in increments of one year.  The prospective business professional must have at least a baccalaureate degree or appropriate credentials to be qualified for Trade NAFTA (TN) status.

Resident Alien for Immigration Purposes -- A resident alien for immigration purposes is the same as an immigrant, permanent resident or "green card" holder. A resident alien can be defined as a non U.S. citizen who has been authorized to live and work in the U.S. indefinitely.

Resident Alien for US Tax Purposes -- A resident alien for US tax purposes is not a U.S. citizen and meets either the "green card" test or the "substantial presence" test described in IRS Publication 519, U.S. Tax Guide for Aliens. A resident alien must pay tax to the U.S. government on income from all sources, worldwide, and may in certain limited circumstances claim benefit of tax treaty exemptions. Individuals who are resident aliens for tax purposes can claim exemptions for dependents. A resident alien for tax purposes annually files a return using IRS form 1040, 1040A, or 1040EZ on or before April 15th.

Residency for Tax Purposes -- A foreign national becomes a resident alien for tax purposes by passing either the "green card" or "substantial presence" test.

See the chart below for additional guidance in determining nonresident & resident alien for tax purposes.

 

(Emory NRA Tax Specialist should make final residency determination)

Visa Type

Nonresident Alien (NRA)

Resident Alien

F & J students

  • During first 5 calendar years in U.S.
  • Does not have a green card

Beginning in 6th calendar year in U.S.

J non-students (e.g., researchers, scholars, teachers)

  • During first 2 calendar years in U.S. out of past 6 years.
  • Does not have a green card

Beginning in 3rd calendar year in U.S.

H, TN, O or E3

  • Will be a NRA until they've been in U.S. long enough to pass "substantial presence test" (183 days)
  • Does not have a green card

Once they've passed the "substantial presence test"

Scholarship and Fellowship Awards -- The IRS defines a scholarship as an amount paid, allowed to, or for the benefit of a student at an educational institution to aid in the pursuit of studies training or research which does not constitute compensation for personal services. It may also be in the form of a reduction in the amount owed by the recipient for tuition, room and board, or any other fee. Fellowships are amounts paid for the benefit of an individual to pursue study, training, or research and generally require services to be performed (either currently or in the future) as a condition of the award.

Social Security Number (SSN) -- A Social Security Number (SSN) is used by the Social Security Administration to maintain an accurate record of an individual's wages or self-employment earnings that are covered under the Social Security Act, and to monitor the individual's record once Social Security benefits begin. A nonresident alien must obtain a Social Security Number (SSN) to be paid as an Emory employee. A foreign national is eligible for an SSN only if his/her visa immigration status authorizes employment. If the foreign national is required to file a tax return with the IRS or wants to claim tax treaty benefits but is not eligible for an SSN, the person must have an Individual Tax Identification Number (ITIN).

Substantial Presence Test -- The rules for the Substantial Presence Test (SPT) are complex. Basically, the test determines whether the foreign national has been in the U.S. a substantial amount of time (183 days) over the current and preceding two years. Once an NRA has been in the U.S. a substantial amount of time, the tax status shifts to resident alien and FICA taxes are withheld from the individual's paycheck. The Emory NRA Tax Specialist administers the SPT and determines tax residency.

Travel Reimbursement -- Reimbursements for expenses not considered extravagant incurred for travel (food, transportation and lodging) for employees, visitors and students. When an identifiable business purpose and benefit to Emory exists, the payment will be considered non-taxable because it meets the accountable plan definitions.  This can, for example, be satisfied by participation in a conference through presenting a paper or organizing meeting sessions or assisting in a presentation or participating in collaboration with others. Travel reimbursements can be taxable as travel grants when there is no identifiable business purpose or benefit to Emory.

U.S. Citizenship and Immigration Services -- U.S. Citizenship and Immigration Services (USCIS), part of the U.S. Department of Homeland Security, is responsible for the administration of immigration and naturalization adjudication functions and establishing immigration services policies and priorities.

U.S. Customs and Border Protection -- The U.S. Customs and Border Protection (USCBP), part of the U.S. Department of Homeland Security, is responsible for admitting foreign nationals into the U.S. Upon admission, USCBP issues to foreign nationals their non-immigrant status appropriate for the purpose of their travel to the U.S.

Visa -- A visa is an official endorsement of a passport indicating the owner is eligible to enter into or to cross a particular country, but not automatically guaranteed admission. The U.S. entry visa is stamped in the foreign national's passport by a U.S. consular officer abroad. The stamp indicates the visa type, the period during which the traveler may enter the U.S. and the number of entries permitted. The stamp may only be obtained outside the U.S. At the port of entry, a U.S. immigration officer of the Department of Homeland Security decides whether to allow the foreign national to enter and how long the person can stay for any particular visit.

Visa Waiver Program -- Foreign nationals from certain countries in the Visa Waiver Program can travel in the U.S. for business or tourism without a visa for up to 90 days. The foreign national must have a machine-readable passport and have valid authorization through the Electronic System for Travel Authorization (ESTA) prior to travel. Foreign nationals are not permitted to extend their stay or change their status.  Link to the ESTA website for FAQs on the program and a current list of participating countries.

VWB (also W-B), Visa Waiver for Business - See B-1 visa definition - Individual is from a visa waiver country.

VWT (also W-T), Visa Waiver for Tourism - See B-2 visa definition above - Individual is from a visa waiver country.

Wire Transfer -- Wire transfer is a method of transferring money from one entity to another. A wire transfer can be made from one entity's bank account to the other entity's bank account. Bank-to-bank wire transfer is considered the safest international payment method. Each account holder must have a proven identity.

Withholding -- Withholding refers to the taxes a foreign national is obligated to pay to the U.S. government. Withholding is taken out of the paycheck or stipend check issued by Emory, then sent to the U.S. government as required by law. Withholding is not automatic. Employees must complete a Form W-4 and submit it to the employer to instruct the Payroll Office how much to withhold. Extreme caution should be exercised in filling out the form, as errors could result in having to pay back taxes, fines or penalties. In addition, nonresident aliens for tax purposes must follow specific procedures, defined by the IRS, when completing this form. The NRA Tax Specialist assists the NRA in completing form W-4.

Work Authorization (Emory's ISSS) -- Work authorization is associated with visa immigration status and specifies what type of employment, if any, a foreign national may have. Most foreign nationals at Emory have entered the U. S. on visas which narrowly limit what employment they are authorized to take.