Slide 1 FastFacts Feature Presentation August 17, 2010 We are using audio during this session, so please dial in to our conference line… Phone number:

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FastFactsFeature Presentation

August 17, 2010

We are using audio during this session, so please dial in to our conference line…

Phone number: 877-468-2134 Participant code: 182500

© 2010 The Johns Hopkins University. All rights reserved.

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Today’s TopicWe’ll be taking a look at…

Hiring a Non U.S. Citizen

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Today’s PresenterDenise Church Senior Accountant, Tax Office in the JHU Controller’s Office

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Session Segments

PresentationDenise will address hiring a Non U.S. Citizen.During Denise’s presentation, your phone will be muted.

Q&AAfter the presentation, we’ll hold a Q&A session. We’ll open up the phone lines, and you’ll be able to ask questions. Denise will answer as many of your questions as time allows.Carla Evans from Payroll Shared Services is also here and available to answer questions.

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Contact Us

If you would like to submit a question during the presentation or if you’re having technical difficulties, you can email us at: [email protected] can also send us an instant message!

GoogleTalk – [email protected] Instant Messenger – HopkinsFastFactsMSN – [email protected]

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Survey

SurveyAt the end of this FastFacts session, we’ll ask you to complete a short survey. Your honest comments will help us to enhance and improve future FastFacts sessions.

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Hiring a Non U.S. Citizen

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Agenda

Today we’ll discuss:Information for hiring a non U.S. citizen to work in the U.S.Foreign National Information Form (FNIF)The importance of creating the ISR correctly How tax residency status is determined in SAPProper taxation of non U.S. citizensTreaty benefitsTax reporting documents issued to non U.S. citizens

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Assumptions

Non U.S. citizen is present in the United StatesHas appropriate work authorizationRequired information

Nationality (country of citizenship)Visa typeImmigration documentsOriginal U.S. arrival dateTemporary or permanent U.S. Social Security number

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Completing the FNIF

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What is the FNIF?

All non-US citizens, except LPR’s (green card holders), should complete the Foreign National International Form (FNIF)FNIF is completed by individuals that are either new hires or are changing their visa type or extending their current visa type.

Located at http://finance.jhu.edu/depts/tax/fnif.pdfForm is fill-able PDFCompleted forms should be returned to Payroll Shared Services, Attention: Carla EvansAdditional documents to be attached to the form include:

Copy of passport, Visa and I-94 Departure Record Copy of work authorization document (e.g. Form I-20, DS-2019, I-797, EAD card)Copy of Social Security card or ITIN card (when available)

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Completing the FNIFRequired information:

Temporary or permanent U.S. Social Security Number Nationality (country of citizenship) Visa type Visa issue date Visa end date U.S. entry date Work authorization expiration date (should be the visa end date)

This information is necessary to complete the ISRA copy of the completed form, without attachments, should be given to the Department Payroll Administrator

Note: Forms without the required information and attached documentation will not be processed, and will result in payment delays.

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Creating the ISR

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Key Fields on the ISR

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Key Fields on the ISR

Nationality- Country of citizenshipCommon Visa Types

F-1 – Academic studentJ-1 – Exchange visitor (may be a student or a non-student)H1-B1 – Worker in a specialty occupationTN – Professional business person from Canada or Mexico (NAFTA) LPR – Lawful Permanent Resident – “Green Card Holder”

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Key Fields on the ISR-continued

Visa Issue Date- taken from immigration documents

Visa End Date- taken from immigration documents

Expiry of WP- taken from immigration documents Generally matches the visa end date

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I-20 Form for StudentsF-1 academic student visa holders are issued the Form I-20

Use these dates to populate the “Visa Issue Date” and “Visa End Date” on the ISR

Issued by JHU international offices

JHMI (SOM, SOPH, SON)HomewoodCarey Business School & School of EducationPeabodySAIS

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Form DS-2019

J-1 visa holders are issued Form DS-2019

Exchange visitor StudentNon-student

Important InformationBox 3- Visa issue/end datesBox 4- Exchange Visitor Category (if the visitor is a student indicate this in the ISR comments section)

Issued by JHU international offices

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Original U.S. Entry Date

Must be present in the U.S. and have appropriate work authorization

Tourist visa history is not considered

Date of initial arrival in the U.S.– not arrival at JHU

Date of first arrival in the U.S. holding an F-1, J-1, H1-B1 visaIs the student/scholar coming to JHU from elsewhere in the U.S.?

Does the non U.S. citizen already have a Social Security number? Tip: The first three digits of a SSN issued in MD usually begin with 212 – 220. A SSN beginning with any other three digits was probably not issued in MD.

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Arrival Date ScenariosEntered the U.S. from China for the first time on 08/26/10 on an F-1 visa to attend JHU as a graduate student.

Does not have a U.S. Social Security number. Arrival date is 08/26/10.

Entered the U.S. from Germany on 09/04/04 to attend school at New York University. Returned to Germany for brief visits and vacations.

Obtained a U.S. Social Security number in New York. Graduated from NYU in May 2010 and arrived at JHU for graduate school in September 2010. Arrival date is 09/04/04.

Entered the U.S. from Australia on 06/21/06 as a J-1 research scholar. Had visited U.S. before holding a tourist visa on 10/15/01.

Does not have a U.S. Social Security number. Arrival date should be 06/21/06.

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Form I-9

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Form I-9

Form I-9 – Employment Eligibility Verification

Electronic Form I-9 is completed by the International Student and Scholar Services Office or other office designated by the individual JHU school.

When Payroll Shared Services receives the permanent Social Security Number, it is entered into the electronic system to complete the E-verification process.

Re-verification of Form I-9 is required to extend work authorization expiration date.

Will be required as a result of a visa extension or the issuance of a new visa type.

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Determining Tax Residency Status

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Resident vs. Nonresident Alien

Two separate United States Income Tax Systems

One system applies to U.S. Citizens and Resident Aliens for tax purposes

The other system applies to Nonresident Aliens for tax purposes

Determining residency status for tax purposes requires obtaining visa history, current visa status and original U.S. arrival date

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Tests to Determine Tax Residency

Green Card TestA green card holder or LPR (Lawful Permanent Resident) is a visa type. These individuals are Resident Aliens for tax purposes by definition.

Substantial Presence Test (SPT)Mathematical test calculated by length of time in the U.S. combined with visa type.

Residency status based on the SPT is determined by the master data entered into the payroll record from the New Hire ISR.Foreign National Information Form (FNIF) should be used to obtain this master data.

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Taxation

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Taxation of Resident Aliens

Resident aliens are taxed exactly like United States citizens. They are entitled to the same deductions and credits.

Not restricted when completing Federal Form W-4

Taxed in the U.S. on worldwide income

Social Security and Medicare tax exemption applies if the resident alien is in full time student status

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Taxation of Nonresident Aliens

Nonresident aliens are not taxed like United States citizens. Most cannot claim dependents or a standard deduction on their federal income tax return. They are not entitled to the same deductions and credits.

Nonresident aliens are restricted when completing Federal Form W-4

Nonresident aliens are taxed in the U.S. on income from U.S. sources only

Social Security and Medicare tax exemption applies if the Nonresident Alien is holding an F-1 or J-1 visa

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Tax Summary Chart

Federal Income

Tax Withholding

State & Local Income

Tax Withholding

FICA (Social Security &

Medicare Tax)

NRA with Wages Subject at graduated rates

Subject at graduated rates

Exempt if holding an F-1 or

J-1 visa

NRA Fellowship Subject at 14% flat rate

Subject at graduated rates

Not applicable

RA with Wages Subject at graduated rates

Subject at graduated rates

Subject to unless full time

student

RA Fellowship Not applicable Not applicable Not applicable

Correctly identify nonresident aliens in the payroll system so they are properly taxed

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Special Rules for NRA Forms W-4

NRA’s can’t claim Exempt Must check “Single,” or “Married,” but withhold at higher single rate box on line 3Should enter a 1 on line 5Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4

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Examples of Incorrect Tax Treatment

This is incorrect: A nonresident alien holding either an F-1 or J-1 visa earning wages is exempt from Social Security and Medicare tax withholding – if payroll record doesn’t reflect NRA status their wages will be subject to these taxes.

This is incorrect: Fellowship payments received by a Nonresident Alien holding an F-1 or J-1 visa are subject to federal income tax withholding at a flat rate of 14% and to MD income tax at graduated rates - if payroll record doesn’t reflect NRA status these payments will not be subject to withholding.

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Treaty Benefits

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Treaty Benefits for NRA’s

Many countries have negotiated income tax treaties with the United States. Treaty benefits will impact a nonresident alien’s federal income tax.

Student wage benefits are usually subject to a dollar limit

Fellowship benefits usually provide an unlimited dollar amount

Teacher/researcher benefits usually provide an unlimited dollar amount

Maryland does not recognize tax treaty benefits

The District of Columbia and Virginia do recognize tax treaty benefits

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Processing Treaty Benefits

The JHU Tax Office processes treaty benefits and creates the treaty info type IT0556 in the SAP payroll record.

FormsWages: Form 8233 is used to claim a withholding exemption from treaty eligible wages. It is completed by the employee and the JHU Tax Office and then forwarded to the IRS for processing.Fellowships: Form W8-BEN is completed to claim a withholding exemption from treaty eligible fellowship income. It is maintained by the JHU Tax Office.

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Tax Reporting

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Tax Reporting Documents- W2

Wage and Tax Statement issued each year to employees. Reflects total taxable wages earned each calendar year and total federal and state income tax withheld. Issued to nonresident alien employees who didn’t claim a treaty withholding exemption on their wages or weren’t eligible for a treaty benefit.

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Tax Reporting Documents 1042-S

Reports treaty wages received by an NRA Reports non treaty fellowship payments received by an NRA and the federal tax withheld on these paymentsReports treaty fellowship payments received by an NRA Note: Box 16 reflects recipient’s country of tax residence. This required field on Form 1042-S is derived from the nationality (citizenship country) in the SAP record.

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In Conclusion

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Summary

Required information when hiring a non U.S. citizen:Citizenship countryVisa typeOriginal U.S. arrival date

Determination of correct tax residency status depends on this informationEnsures the non U.S. citizen is properly taxed

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Resources - JHU Tax Office

JHU Tax Office is located on the Eastern Campus in Suite C020

Tax Office walk in hours – No appointment necessaryTuesday and Thursday afternoon 2:00 PM – 4:30 PMWednesday morning 9:00 AM – 12:00 PM

Website address: http://finance.jhu.edu/depts/tax/index.html

E-mail address: [email protected]

Telephone: 443-997-8688

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Other Resources

JHU International Offices

JHMI Office of International Student, Faculty and Staff Services: http://www.hopkinsmedicine.org/intlsvcs/

Homewood Office of International Student and Scholar Services: http://web1.johnshopkins.edu/isss/

Carey Business School and School of Education International Services: http://onestop.jhu.edu/carey/international/

http://onestop.education.jhu.edu/international/index.html

Peabody Office of International Student Affairs: http://www.peabody.jhu.edu/isa

SAIS International Student and Scholar Services Office: http://www.sais-jhu.edu/students/international/office-information.htm

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Other Resources (Cont)

Link to JHMI Office of International Student, Faculty and Staff Services Visa Chart: http://www.hopkinsmedicine.org/intlsvcs/visachart.pdf

HR/Payroll Shared Services web site address: http://ssc.jhu.edu/hr_payroll/index.html

Link to sample NRA Form W-4 on HR/Payroll Shared Services site: http://ssc.jhmi.edu/hr_payroll/DataFiles_HR/taxform.pdf

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We’re going to open the phone lines now!

There will be a slight pause, and then a recorded voice will provide instructions on how to ask questions over this conference call line.

We’ll be answering questions in the order that we receive them.

We’ll also be answering the questions that were emailed to us during the presentation.

If there’s a question that we can’t answer, we’ll do some research after this session, and then email the answer to all participants.

Q&A

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Thank You!

Thank you for participating!We would love to hear from you.

Are there certain topics that you would like us to cover in future FastFacts sessions?Would you like to be a FastFacts presenter?Please email us at: [email protected]

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Survey

Before we close, please take the time to complete a short survey.Your feedback will help us as we plan future FastFacts sessions.Click this link to access the survey… http://connect.johnshopkins.edu/fastfactssurvey/

Thanks again!