Division of Financial Affairs
Tax
There are no simple answers to this question. Cornell must withhold taxes on all payments to nonresident aliens unless the payment is exempt under the Internal Revenue Code, a tax treaty, or as foreign source income.
Payments to nonresident aliens are reported to the individual and the IRS on Form 1042-S or the W-2 form, but not on the 1099 form. The W-2 is issued by January 31; the 1042-S by March 15. Payments to resident aliens are reported on the W-2 form or 1099 form, but not on the 1042-S form.
To qualify for treaty exemption, you must be a citizen or a permanent resident (generally, a noncitizen who files a resident income tax return) of the "treaty country," and the type of payment must be exempt under that specific treaty. In addition, the IRS requires a U.S. federal identification number, evidence of nonresident alien status (i.e., the substantial presence test), evidence of proper work authorization (i.e., visa), and a properly completed IRS "treaty exemption form" (i.e., Form 8233 for wages, fees, honoraria). Information on tax treaties is available from the IRS (Pub.901, U.S. Tax Treaties).
Note: Although Cornell only grants treaty exemption to nonresident aliens, some treaties have "tie breaker rules." If a foreign national feels he or she qualifies for treaty exemption in spite of the fact that Cornell withheld taxes, the individual can file IRS Form 8833 with his or her tax return and certify to the facts that merit the "treaty-based return position." Cornell cannot act as an individual's tax adviser.
Cornell does not report payments to the home country, but it appears that IRS reports income that is exempt under a treaty to the home country.
If you are a nonresident alien and have no U.S. source income, the IRS indicates you are not required to file an income tax return. However, you must file form 8843 with the IRS disclosing information about your nonresident alien status. Resident aliens are taxed on their world-wide incomes and, therefore, must file U.S. income tax returns if they have income from any sources.
You should file federal and New York State tax returns to ensure compliance with tax laws, to pay actual tax liability, and to document any tax amounts that need to be refunded to you.
Note: The Internal Revenue Code establishes the rate of withholding, but the withholding rate does not necessarily correspond with a taxpayer's actual year-end tax liability.
These credits are generally not available to nonresident aliens. Please refer to IRS Publication 970, Tax Benefits for Education.
*Hope credit can be claimed only if at least one eligible student is attending an eligible educational institution in a Midwestern disaster areas in the states of Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska, and Wisconsin.
All foreign nationals as U.S. tax laws are complicated. It is the individual's responsibility to comply with U.S. tax laws. The University Tax Office cannot act as an adviser to individual taxpayers.
Note: Cornell's Office of Global Learning hosts a tax seminar each spring for foreign nationals.
"Nonresident alien" and "resident alien" are two different tax classifications, unrelated to immigration.
Yes. Life in the U.S. is very complicated without a tax ID number.
In addition, you must have a tax ID number to file a tax return. Do not file returns before March 15, as many nonresident aliens receive both a W-2 form and a 1042-S form, which is not issued until March 15. Nonresident aliens should file a 1040NR (federal) and an IT-203 (NY).
Nonresident aliens are exempt from U.S. social security payroll taxes, also known as Federal Insurance Contributions Act (FICA) taxes, but resident aliens are subjected to these taxes.
Note: FICA and Medicare taxes apply to wages and self-employment income, not fellowships.
