If you are an international student, employee, or fellow receiving payments from Rice, you have certain tax withholding and reporting requirements. This page provides important information about why tax withholding is applied and how it impacts you.
Tax Withholding
The federal income tax is a pay-as-you-go tax. Taxpayers pay the tax as they earn or receive income during the year. An employer generally withholds income tax from their employee’s paycheck and pays it to the IRS on the employee's behalf. Additionally, non-employee fellowships paid to Nonresident Aliens are subject to U.S. withholding tax and treaty benefit analysis.
Tax Residency Status
While U.S. immigration laws classify individuals as immigrants, nonimmigrants, and undocumented aliens, tax laws distinguish only between Nonresident Aliens and Resident Aliens.
The IRS uses the following terminology for U.S. tax purposes:
- U.S. Citizen: A person who is a citizen of the United States. Must report and pay taxes on all income from any source worldwide.
- Foreign National: Generally, any person residing in the United States who is not a citizen. A foreign national can be a U.S. Resident Alien or Nonresident Alien.
- Resident Alien: A noncitizen who is treated in the same manner as a U.S. citizen for tax purposes (taxed on worldwide income, etc.), who has either:
- Been given the privilege, according to the immigration laws, of residing permanently in the U.S. as an immigrant. You generally have this status if the U.S. Citizenship and Immigration Services (USCIS) issued you an alien registration card, Form I-551, also known as a "green card." OR
- Met the substantial presence test.
- Nonresident Alien: a noncitizen who has met neither the green card test nor the substantial presence test. Must only report and pay U.S. taxes on income received from U.S. sources.
Your tax status as a Nonresident Alien or Resident Alien is determined by the following two tests. Meeting any one of the two will qualify you as a Resident Alien.
- Lawful Permanent Residency Test
- Commonly referred to as the "green card test". If you have a valid green card at any time during the calendar year, you are classified as a Resident Alien for tax purposes and must file the U.S. resident tax return (Form 1040). In certain cases, a Nonresident Alien that receives a green card in the middle of the calendar year might be considered a dual-status taxpayer for that year.
- Substantial Presence Test
- Foreign Nationals who are not Permanent Residents can still be considered Resident Aliens for U.S. tax purposes if enough time has been spent in the U.S. during the current and prior two calendar years. To meet the Substantial Presence Test, an individual must have been physically present in the U.S. for
- 31 days in the current year, AND
- 183 days over three years, using the following formula:
- All days in the current calendar year
- 1/3 of the days in the first year before the current year
- 1/6 of the days in the second year before the current year
- Exceptions
- Foreign nationals on certain visa types are considered "exempt individuals" for a portion of their time in the U.S. Exempt individuals can exclude some of their days of presence from the Substantial Presence Test. Students on F-1 or J-1 visas may exclude their first five tax years under those visas. Individuals present in the U.S. under a J or Q non-student immigration status may exclude their first two tax years.
- Foreign Nationals who are not Permanent Residents can still be considered Resident Aliens for U.S. tax purposes if enough time has been spent in the U.S. during the current and prior two calendar years. To meet the Substantial Presence Test, an individual must have been physically present in the U.S. for
Tax Treaties
- If your home country has a tax treaty (bilateral agreement) with the U.S. based on your visa type, you may be eligible for reduced withholding rates or exemptions on certain types of income. The Tax office will apply these treaty benefits, based on the properly signed documentation (Form 8233 or Form W-8BEN for Nonresident Aliens, or Form W-9 for Resident Aliens) that you submit.
Determining your U.S. Tax Residency Status
- Sprintax Calculus
- Shortly after your hire date, you will receive access to the Sprintax Calculus system, a secure online portal for submitting your visa/immigration history to the Tax office, which will determine your residency status and tax treaty eligibility based on your individual history. If you qualify for tax exemption treaty benefits, the necessary W-8BEN, 8233, or W-9 form(s) to claim your treaty benefits will be generated by Calculus for you to e-sign.
- Sprintax Calculus User Guide
Filing your U.S. Tax Return
- Sprintax Returns
- Nonresident aliens are not eligible to submit the standard U.S. tax return (Form 1040), and instead must submit the nonresident return (Form 1040-NR). The Rice OISS office will provide access to the Sprintax Returns system to make the tax return filing process much simpler. Sprintax Returns licenses for 2024 returns will be made available in March 2025. Please refer to the OISS web page here for more information.
What should you do as a new employee or fellow?
- Submit your visa/immigration information through Sprintax Calculus and review your U.S. tax residency and treaty eligibility.
- If you qualify for any tax treaty benefits and would like to claim them, e-sign and digitally submit the appropriate treaty forms via Calculus. The Tax office will update your withholding accordingly.
- Review the tax withholding on your paycheck to ensure that everything looks correct. Your payslips can be found under the Me section of your iO account.
- File your tax return with the IRS before April 15 of the following tax year.
Questions?
Contact ForeignNationalTax@rice.edu