Certain payments of U.S. source income made to foreign persons are subject to tax withholding. The following is a table of basic taxation rules for different Visa types which could be issued to foreign individuals that are being employed in the U.S.
Nonresident Alien (NRA):
• Generally: The worker must obtain a Social Security Number, even if not subject to Social
Security & Medicare taxes. This is necessary for reporting wages.
• Non-Resident Aliens are only allowed to claim Single status with 1 dependent exemption. Residents of Canada & Mexico who commute to work are not restricted to the S-1 status.
|TYPE OF VISA||FICA||FIT||SIT||SUTA||FUTA|
|F-1, J-1, M-1||Exempt||Taxable||Taxable||Taxable*||Exempt|
|J-2, F-2, M-2, Q-2||Taxable||Taxable||Taxable||Taxable||Taxable|
N/A* = Not allowed to work in the U.S.
Taxable* = Depends on State; verify with individual state agencies
Exempt = For employees with Visa’s that exempt them from FICA & FUTA, most states tax these employees for SUI. The following states exempt them: Arkansas, Colorado, Florida, Maryland, Pennsylvania, Washington, and Wisconsin.
- Some countries have tax treaties with the US which may exempt withholding ( Form 8233
must be filed before work begins).
- A Green Card (Form I-551) is a permanent resident visa form. An employee with a Green
Card is taxed exactly like a regular US citizen.
Visa Type Descriptions:
- B-1 (business)
- B-2 (tourist)
- D-1 (Foreign transport company, US transport company)
- E-1 (Treaty Trader)
- E-2 (Investor)
- F-1, J-1, M-1 (Student up to 5 years, Teacher/trainee up to 2 years)
- H-1 A&B (Specialty Occupations)
- H-2 A&B (Temp. Seasonal Workers)
- L-1 (Intracompany transfers)
- O-1 (Extraordinary ability)
- O-2 (Assistant to above)
- P-1 (Entertainers & athletes)
- Q-1 (Cultural exchange visitors, Student up to 5 years, Teacher/trainee up to 2 years)
- R-1 (religious occupations; may only be employed by the religious org that sponsored them)
- TN (NAFTA Professionals)
- J-2, F-2, M-2, Q-2 (Spouses of “1”)