Federal Income Tax Withholding for Nonresident Aliens (NRAs)

Federal income tax for NRAs is withheld using graduated tax rates based on the university’s semi-monthly payroll period, instead of the flat 30% withholding. NRAs are not eligible for reduced rates unless a tax treaty applies.

Special IRS Withholding Rules for NRAs

• Mandatory Withholding Status: "Single", regardless of actual marital status.
• No Standard Deduction: Except for students from India under a tax treaty.
• No W-4 Allowances or Dependents: See
  IRS Notice 1392.

How Withholding Is Calculated

For payroll tax calculations, employers must add a fixed amount to the NRA’s taxable wages before applying the IRS Publication 15-T withholding tables. This adjustment simulates the disallowance of the standard deduction.

Tax Treaty Exemptions

If an NRA qualifies for a tax treaty exemption, it may reduce or eliminate federal tax withholding on certain income. To claim treaty benefits, the NRA must:

• Complete a GLACIER tax review.
• Submit the proper documentation (e.g., Form 8233, W-8BEN).
• Without valid documents, standard NRA withholding rates will apply.

References: Internal Revenue Code Sec. 3402, IRS Publication 515

State and Local Income Tax for Nonresident Aliens

NRAs are generally subject to state and local income taxes, depending on the state.

Each state has its own rules, rates, and forms.

Utah’s income tax is based on federal adjusted gross income (AGI).

If a foreign national’s entire U.S.-source income is exempt under a federal tax treaty, their federal AGI is zero.

FICA Taxes (Social Security and Medicare)

Certain nonresident aliens (NRAs) are exempt from paying FICA taxes if they meet specific criteria under the Internal Revenue Code.

Who Is Exempt?

To qualify for FICA exemption, an individual must:

• Be in F-1, J-1, M-1, or Q-1 visa status
• Be a nonresident alien for U.S. tax purposes
• Perform services consistent with visa (e.g. on-campus or academic training)

Note: The university requires completion of the GLACIER process to enable FICA exemption.

When FICA Applies

• The individual exceeds the exempt years
• Becomes a resident alien for tax purposes
• Changes to a non-qualifying visa (e.g. H-1B, F-2, J-2)

Non-Eligible Visa Statuses

F-2 and J-2 dependents are not eligible for the exemption. They are not primary visa holders and are not engaged in academic or exchange programs.

F-1/J-1 students who become resident aliens may still qualify for the Student FICA Exemption under IRC Sec. 3121(b)(10).

Source: Internal Revenue Code Sec. 3121(b)(19)

Payroll Tax Chart

Tax Type	Applies to NRA?	Notes
Federal Income Tax	Yes	Withheld at special graduated rates using NRA withholding rules (single, no standard deduction).
Utah State Income Tax	Yes (if taxable)	Flat rate on Utah wages. If income is exempt under a tax treaty for federal taxation, Utah usually does not tax it.
FICA (Social Security & Medicare)	Sometimes	Exempt for F-1/J-1 nonresident students/scholars (within 5 or 2 calendar years). Otherwise, FICA taxes apply.
Local Taxes	No (for Utah)	Utah has no local or city income taxes.

FICA Exemption Rules

Visa Type	FICA Exempt (While NRA)?	FICA Exemption Limit
F-1 (Student)		First 5 calendar years
J-1 (Student)		First 5 calendar years
J-1 (Scholar/Professor)		2 years out of the last 6 calendar years
H-1B, J-2, F-2, Post-residency		Not exempt; FICA tax applies