Overview: Payroll for Foreign (Non-Resident) Employees
Many Stanford students, postdoctoral scholars, employees and visitors are present in the U.S. on temporary visas. An individual present in the U.S. on a temporary visa, who is not a tax resident of the U.S., is considered to be a ‘Non-Resident Alien'. Non-resident aliens have special taxation rules and may be able to claim tax treaty benefits for reduced federal taxation.
On this page:
- Form I-9 Collection and Reverification
- Social Security Numbers
- Withholding Allowance Limitations
- FICA Taxes
- Tax Treaties
- Year-End Tax Forms
Form I-9 Collection and Reverification
To comply with U.S. law, Stanford must verify eligibility for employment for all new employees, including non-resident alien employees. Although employers may not specify what documents the employee must supply to establish eligibility for employment, non-resident aliens generally have one of the following two types of documents:
- Unexpired foreign passport with an I-94 card and appropriate supporting document (a DS-2019 for a J-1, an I-20 for a F-1, an I-797 for an H-1B and a legible date on the I-94 for a TN)
- An unexpired Employment Authorization Card (common for J-2 spouses and F-1 students on optional practical training)
Work authorization expires with the expiration date on the I-94 supporting document or the Employment Authorization Card. Expiration dates must be monitored by the employee and by the responsible administrator. The employee must obtain and present an updated employment authorization document before the current document expires to continue to work. If an updated document is not obtained, the employee must stop working by the expiration date of the current authorization document. Reference How To: Verify Employment Eligibility (I-9), and How To: Update Employment Eligibility (I-9). Additional information on the Form I-9 can be found on Employment Eligibility Verification (I-9) Compliance @Stanford.
Social Security Numbers
A Social Security Number is required of all employees in the U.S. Most non-residents arrive to the U.S. without a Social Security Number. It is recommended that the non-resident wait for 2 weeks after entering the U.S. before applying for a Social Security Number. See the I-Center web site for additional information on the application process. Non-resident employees may begin working before applying for a Social Security Number, but it is required that they apply and provide the number to Stanford in a timely manner. Student employees should present their Social Security Card in person at the Registrar's Office for entry into Stanford systems. All other employees should present their Social Security Card to their department administrator for entry.
Withholding Allowance Limitations
Withholding allowances on the Federal W-4 form are limited to Single marital status and 1 withholding allowance for non-resident aliens. Residents of Canada, Mexico and Korea must claim Single marital status, but may claim 1 withholding allowance for each dependent accompanying them to the U.S. Withholding allowances on the California DE-4 form are not limited for non-resident aliens. Reference How To: Declare or Change Withholding Allowances.
Non-resident aliens on F-1 and J-1 visas are exempt from paying FICA (Social Security and Medicare) taxes until they become residents for tax purposes. F-1 and J-1 students generally maintain non-resident status for their first 5 calendar years in the U.S. Students also fall under the student FICA exemption, so generally do not pay FICA taxes even after they become residents for tax purposes. J-1 researchers generally maintain non-resident status for their first 2 calendar years in the U.S. On January 1 of the third calendar year of presence, they begin to pay FICA taxes. All other non-residents, including H-1B, J-2 and TN visa-holders, are subject to FICA taxes from their first day of employment. To establish exemption from FICA taxes, non-resident alien employees should submit a completed Withholding Allowance Declaration Form to Payroll listing all entry and exit dates to the U.S. so residency status can be determined. Reference How To: Declare or Change Withholding Allowances.
Residents of certain countries may be eligible to claim a tax treaty to exempt all, or part, of their wages from U.S. federal income tax withholding. California does not honor federal tax treaties. Tax treaties for F-1 and J-1 students generally exempt a limited amount of wages, from $2000-$5000, from federal income tax. Tax treaties for J-1 researchers generally exempt all wages from federal income tax. See How To: Claim Tax Treaty for Salary Payments for a complete list of treaty countries and relevant forms to complete to claim the tax treaty benefit with Stanford. A Social Security Number is required to claim the tax treaty benefit. Submit completed forms to Payroll by:
U.S. Mail to: 3145 Porter Drive, Palo Alto, CA 94304
~ OR ~
ID Mail to MC 8440
~ OR ~
In person at the University Cashier's Office at 459 Lagunita Drive, Tresidder Memorial Union Suite 7, Stanford, CA 94305
Year-End Tax Forms
Wages for non-resident alien employees are reported on Form W-2 at year-end. Non-resident aliens who have claimed a tax treaty with Stanford will receive a second form, Form 1042-S, reporting the wages associated with the tax treaty benefit.