The IRS rules for withholding on wages of nonresident alien employees, depends upon the results of the 183-day residency formulas as determined by the Substantial Presence Test based on immigration status/history and days of presence in the U.S. This provides withholding on wages that more closely approximates your income tax liability. The following are the Form W-4 rules and special computations for withholding on wages.
Form W-4 Rules
When completing Form W-4 you must:
- Not claim exemption from withholding
- Claim single status even if married
- Claim only one allowance (with a few exceptions)
- Write “NRA” on the dotted line on Line 6
Additional personal allowances may be claimed by residents of Canada, Mexico, or South Korea. Students from India may claim an allowance for an accompanying spouse and dependent children who are U.S. citizens or residents (with SSN or ITIN numbers). Nationals of American Samoa and the Northern Mariana Islands may also claim allowances for dependents.
At your option, you may request an additional withholding amount.
When should I request an additional withholding amount?
We cannot advise you about your tax withholding. However, the following may be helpful.
- If your total wages are less than the personal exemption amount (listed in IRS Publication 519) you will have ZERO FEDERAL TAX WITHHOLDING. Also, if your only US source income for the year is wages that are less than the personal exemption amount for the year, you may not need to submit a Form 1040NR (or From 1040NR-EZ).
- If your total wages exceed the personal exemption amount for the year, you may owe taxes with your tax return and be subject to under withholding penalties and interest.
What if I do not submit a new Form W-4?
The default will be single and zero allowance (maximum tax withholding) when no Form W-4 is completed.