A student who performs services in exchange for pay receives "compensation" for his or her work and is generally considered to be an employee of the university. This employee compensation may take the form of wages or salary (depending on permanency, level of employee benefits, job duties, etc.). Wage and salary payments, in the university context, can be broken down further into such categories as student employment, work-study, teaching assistantships, and others. All such payments are processed through Payroll Services.
Payments received in connection with the past, present or future performance of services by a non-resident alien student are taxable income and are subject to federal and state income tax withholding by the university unless a tax treaty applies.
If Wages Are Not Completely Exempt from Tax Based on Treaty
If no tax treaty exists or the treaty does not exempt the total amount of wages, the wages received by nonresident alien students are subject to the same graduated/progressive Federal and state income tax withholding tables to which U.S. citizens and residents are subject, with a few important exceptions. Federal and state income taxes are withheld throughout the year based on the Form W-4, Employee's Withholding Allowance Certificate (PDF) and the applicable state form completed by the student. Nonresident alien students must follow a different set of instructions when completing the Form W-4 (discussed below). Even if an income tax treaty allows an exemption from withholding, a Form W-4 should still be completed because (1) the treaty exemption is never claimed on the Form W-4 and (2) treaty provisions may have dollar limitations.
Non-resident alien students who receive payments that are not completely exempt from income tax withholding under a tax treaty will receive a Form W-2, Wage and Tax Statement, from Payroll Services at GW. Form W-2 is also provided to the IRS.
Tax Treaty Available
Students from countries that have a tax treaty with the U.S. that includes a wage article may claim exemption or a reduction of income tax withholding if the payment meets the requirements of the treaty and the student completes the required forms with the University's Tax Department. The taxes covered under a treaty exemption include Federal, Virginia, and/or D.C. tax. Maryland does not recognize tax treaties.
In order for the university to consider granting a tax withholding exception under a treaty provision, the student is required to complete Form 8233, Exemption from Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual (PDF). Additionally, students must complete a country-specific statement that details the terms of the treaty. Both forms, along with a list of applicable tax treaties, are available at the Tax Department.
The university has the right to reject a Form 8233 if it has reason to believe that such exemption is not warranted or if the form is completed inaccurately.
Since Forms 8233 and the country-specific statement must be submitted by the university to the IRS for their review and approval, it is imperative that these and all other tax documents be completed at the time of hire to avoid the withholding of tax or the delay of paychecks. Students must, however, have Social Security Numbers before any exemption from withholding can be granted. Note that Form 8233 and the country-specific statement must be completed each year.
The university reports treaty exempt wage payments on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. Form 1042-S is also provided to the IRS.
Non-resident alien students are responsible for reporting their exempt and taxable payments and remitting any tax due with their personal income tax return at the end of the year on Forms 1040NR or 1040NR-EZ and the corresponding state forms.
Nonresident Alien Student Employee's Detailed Instructions for Completion of Form W-4:
Note that the instructions below are for illustrative purposes only. If you are employed at GW, please use the W-4 provided by the Tax Department.
DO NOT use the instructions on the front or back of the actual Form W-4. Those instructions, although not made entirely clear from the form itself, apply only to U.S. citizens and residents. The following instructions come from a combination of sources including U.S. statutes, regulations and income tax treaties.
Complete the bottom half of the Form W-4 in the following way (leave the top half of page 1 and all of page 2 blank):
Lines 1 and 2 - Local Address and Social Security Number. All student employees must have a U.S. Social Security Number. If you don't have one, you must apply for one in person at the U.S. Social Security Administration Office.
Line 3 - Every nonresident alien MUST check the Single marital box on this line (or the Married, but Withhold at Higher Single Rate box) - even if you are married. You may NOT check the Married box. This is required by statute because nonresidents are required to file their income tax returns separately from their spouse and children.
Line 4 - Check this box if it applies to you.
Line 5 - Every nonresident student MUST claim one (1) withholding allowance on Line 5, unless you are from:
- Canada or Mexico or are a U.S. National. Additional allowances are permitted for spouse (if married) and dependents (e.g., children)
- South Korea or Japan. Additional allowances are permitted for spouse (if married) and, generally, dependents (e.g., children) that live with you in the U.S.; however, if you have any income from non-U.S. sources, you must prorate additional exemptions. (See IRS Publication 519 (PDF) or the actual treaty for more information.)
- India. Students are generally permitted one additional allowance for the standard deduction, one for a spouse (if married) and one each for children who are U.S. citizens or residents.
The above exceptions for South Korea, Japan, and India are based on the respective tax treaties with those countries. The exceptions for Canada and Mexico are based on domestic U.S. Law. Even if you are eligible to claim more than one allowance on Line 5 based on the above rules, you must still check the Single box on Line 3. U.S. tax law requires this.
Line 6 - Fill in this line if you want additional withholding beyond the normal amounts determined by withholding tables (optional).
Line 7 - Leave this line blank because this condition applies only to U.S. citizens and resident aliens. NOTE: On the next line, employees must sign and date the form.
Lines 8-10 - Leave blank.
- International Students
- Meeting with the Tax Department
- Foreign National Information System
- Taxation of Wages for International Students
- Taxation of Scholarships, Fellowships & Stipends
- Social Security and Medicare Taxes
- State Income Taxes
- Social Security Number & Individual Taxpayer identification Number
- Forms and Publications
- Frequently Asked Questions for International Students
- International Tax Workshop
- Tax Implications and Reporting Requirements of Payments to International Students (“Nonresident Aliens”)
- U.S Citizens & Residents