To comply with federal tax laws regarding payments made to nonresident aliens (NRAs), all SDSU employees who are not U.S. citizens or permanent resident aliens must meet with Payroll and Compensation to determine their tax status.
Special Withholding Rules
Per IRS Notice 2005-76, NRA employees are required to complete their withholding allowance forms (EAR/SPAR) as follows:
- Do not claim “Exempt” from withholding
- Check only “Single” marital status, regardless of actual marital status
- Claim only one allowance (There are exceptions.)
- Check “NONRESIDENT ALIEN” on EAR/SPAR
Income Tax Treaty
Residents (not always citizens) of certain foreign countries may be exempt from (i.e. not subject to) federal income taxes under the applicable income tax treaty between the U.S. and their country of residency.
To claim a tax treaty benefit, employees must:
- Be eligible, and
- Sign Form 8233 each calendar year.
Payroll will determine whether employees are eligible for the tax treaty benefit at the appointment and will provide Form 8233 for the calendar year in which employees started working. For the subsequent years, Audit & Tax staff will provide Form 8233 to the eligible employees.
Please note that California does not recognize income tax treaties. Employees will be subject to state income tax whether or not they are exempt from federal income tax.