International Tax
This page holds definitions related to taxes for resident and nonresident aliens, FICA, and foreign travel.
Resident Alien
Definition: A Resident Alien is a person that becomes a resident of the United States via:
- becoming a permanent resident (via a Green Card),
- meets the Substantial Presence Test for the calendar year, or,
- makes the first year election.
Resident Aliens Tax Information
Green Card: An alien registration card issued by USCIS (United States Citizenship and Immigration Services) which gives the recipient the status of permanent resident in the United States as an immigrant.
Substantial Presence Test (SPT): The Substantial Presence Test involves counting eligible days in the U.S. to determine residency for tax purposes. The SPT consists of two parts which must be met: the 31-day test and the 183-day test.
You must be present in the United States for at least 31 days during the calendar year, and 183 days during the three-year period that includes the current year and the two previous years. In an example, the formula below would appear for determining the substantial presence test for 2024:
- 2024 = all days present;
- 2023 = ⅓ of the days present;
- 2022 = ⅙ of the days present.
The cumulative totals must meet or exceed the required number of days to meet the test.
Income and Taxation: All income earned (worldwide), within the United States and outside of the United States is subject to tax in the same manner as a United States citizen. (U.S. Citizen: Person born or naturalized in the United States). Taxed for Social Security and Medicare (FICA) taxes under the same rules as a United States citizen.
Nonresident Alien
Definition: A nonresident alien is a person that is not a U.S citizen or classified as a Resident Alien. Sec (7701(b)(1)(B))
Income/Wages for nonresident aliens are taxed under the United States if payments are tied to dependent personal services performed within the United States. To be exempt from tax, all 3 of the following conditions must be met:
- The nonresident alien performing services is present in the United States for 90 days or less.
- Compensation received for the services is under $3,000.
- The nonresident alien performs the services as an employee of a U.S. corporation, a foreign corporation, the foreign office of a U.S. citizen or resident alien individual (other non VCU related criteria exists-See IRC 861(a)(3) and 864(b)(1)).
Or the following two conditions must be met:
- The nonresident alien performing the services in the United States is present in a F, J, M or Q nonimmigrant status.
- Compensation received the nonresident alien is paid by a nonresident alien individual, a U.S. corporation or a U.S. partnership (including from a U.S. possession)* IRC 872(b)(3).
Nonresident Aliens Tax Information
Related Forms:
- W-4- Employee’s Withholding Certificate
Used to withhold federal income tax from payments. - 8233- Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual
Used to claim tax treaty exemption from wages.
Tax Paperwork:
- Form 8233 — allows for a reduction of the flat tax rate if provided prior to the payment in which withholding would take place on compensation income. (Reg. 1.1441-4(b)(2)).
- Form W-8 BEN — allows for a reduction in the withholding rate due to a tax treaty if provided prior to the payment in which withholding would take place. (Reg. 1.1441-6).
- Form W-9 — provision for a payee who is subject to backup withholding requirements.
Tax Residency and Tax Status
Non-Resident Aliens: (Persons who are not US citizens and have not met the Green Card or Substantial Presence Test)
- Federal taxes are exempted via an applicable tax treaty.
- Social Security and Medicare taxes are exempt if the payee is under a F-1, J-1 or Q-1 visa.
- Virginia State taxes are exempted via an applicable tax treaty.
- Tax codes to expect on the employee pay stub:
- F13- Federal wages exempt from taxes via a tax treaty for Teachers/Researchers
- F14- Federal wages exempt from taxes via a tax treaty for Students
- V23/V24 State wages exempt from taxes via a tax treaty for Teacher/Researchers
- V93/V94 State wages exempt from taxes via a tax treaty for Students
- FNR (Federal) and VTX (State) will be withheld if no treaty benefits are available.
Resident Aliens: (Persons who are not US citizens but have met the Green Card or Substantial Presence Test)
- Federal taxes are only exempted via an applicable tax treaty.
- Social Security and Medicare taxes are not exempt under the International FICA exemption.
- Students can be exempted from FICA in the same manner as a US Citizen(Domestic Student Exemption)
- Virginia State taxes are only exempted via an applicable tax treaty.
- Tax codes to expect on the employee pay stub:
- F13- Federal wages exempt from taxes via a tax treaty for Teachers/Researchers
- F14- Federal wages exempt from taxes via a tax treaty for Students
- V23/V24 State wages exempt from taxes via a tax treaty for Teacher/Researchers
- V93/V94 State wages exempt from taxes via a tax treaty for Students
- FED (Federal) and VTX (State) will be withheld if no treaty benefits are available.
Resident Alien
Definition: A Resident Alien is a person that becomes a resident of the United States via:
- becoming a permanent resident (via a Green Card),
- meets the Substantial Presence Test for the calendar year, or,
- makes the first year election.
Resident Aliens Tax Information
Green Card: An alien registration card issued by USCIS (United States Citizenship and Immigration Services) which gives the recipient the status of permanent resident in the United States as an immigrant.
Substantial Presence Test (SPT): The Substantial Presence Test involves counting eligible days in the U.S. to determine residency for tax purposes. The SPT consists of two parts which must be met: the 31-day test and the 183-day test.
You must be present in the United States for at least 31 days during the calendar year, and 183 days during the three-year period that includes the current year and the two previous years. In an example, the formula below would appear for determining the substantial presence test for 2024:
- 2024 = all days present;
- 2023 = ⅓ of the days present;
- 2022 = ⅙ of the days present.
The cumulative totals must meet or exceed the required number of days to meet the test.
Income and Taxation: All income earned (worldwide), within the United States and outside of the United States is subject to tax in the same manner as a United States citizen. (U.S. Citizen: Person born or naturalized in the United States). Taxed for Social Security and Medicare (FICA) taxes under the same rules as a United States citizen.
Nonresident Alien
Definition: A nonresident alien is a person that is not a U.S citizen or classified as a Resident Alien. Sec (7701(b)(1)(B))
Income/Wages for nonresident aliens are taxed under the United States if payments are tied to dependent personal services performed within the United States. To be exempt from tax, all 3 of the following conditions must be met:
- The nonresident alien performing services is present in the United States for 90 days or less.
- Compensation received for the services is under $3,000.
- The nonresident alien performs the services as an employee of a U.S. corporation, a foreign corporation, the foreign office of a U.S. citizen or resident alien individual (other non VCU related criteria exists-See IRC 861(a)(3) and 864(b)(1)).
Or the following two conditions must be met:
- The nonresident alien performing the services in the United States is present in a F, J, M or Q nonimmigrant status.
- Compensation received the nonresident alien is paid by a nonresident alien individual, a U.S. corporation or a U.S. partnership (including from a U.S. possession)* IRC 872(b)(3).
Nonresident Aliens Tax Information
Related Forms:
- W-4- Employee’s Withholding Certificate
Used to withhold federal income tax from payments. - 8233- Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual
Used to claim tax treaty exemption from wages.
Tax Paperwork:
- Form 8233 — allows for a reduction of the flat tax rate if provided prior to the payment in which withholding would take place on compensation income. (Reg. 1.1441-4(b)(2)).
- Form W-8 BEN — allows for a reduction in the withholding rate due to a tax treaty if provided prior to the payment in which withholding would take place. (Reg. 1.1441-6).
- Form W-9 — provision for a payee who is subject to backup withholding requirements.
FICA Tax Exemptions
Domestic Student FICA Exemption: Students who are enrolled at least half-time and employed by the school in which they attend are eligible for an exemption from Social Security and Medicare tax. The exemption does apply to school breaks of 5 weeks or less. The exemption ends when the student is not enrolled, fall below half-time enrollment, or meets the definition of a career employee. The employment has to be secondary to the pursuit of study.
International Exemption*: Non-immigrant foreign persons who are temporarily in the US under a F-1, J-1, M-1, Q-1,or Q-2 visa and working for VCU are exempt from FICA(Social Security and Medicare) taxes as long as they have not exceeded the presence timeframe. (Students= 5 years, Non-students=2 years)
*Internal Revenue Code (26 USC 3121 (b) (19)) *Social Security Act (42 USC 410 (a) (19))
Foreign Travel Tax
In all instances where foreign business travel and annual/personal leave are combined, the traveler must submit a signed VCU Foreign Travel Certification with their TA (Travel Authorization).
Treasury Regulations § 1.274-4 requires that certain foreign travel expenses be allocated between nontaxable business expenses of the University and taxable income to the traveler, unless a specific exception is met.
The IRS requires this certification to avoid allocation of foreign travel expenses if:
- The trip is greater than seven days in length (excluding the day of departure and counting the return day), AND
- Twenty-five percent or more of the days spent on the trip are non-business days (both departure and return days are considered business days)
A day is considered a business day if the business activity requires you to be at a specific foreign location on that day. Weekends and holidays are considered business days if the day before the weekend or holiday and the day after require you be at a specific foreign location to conduct business activities on those days. If the personal (non-business) portion of the trip is a major consideration of the travel, expenses reimbursed by the University will be reported as taxable income to the traveler.
For more information on the requirements please see the Treasury Regulations §1.274-4.