International individuals at UVA (students, researchers, faculty) must comply with US tax laws and file appropriate tax forms with the IRS on annual basis.
US tax law provides that a person can be recognized as a non-resident or a resident for tax purposes which affect the income taxation, reporting and filing. Non-residents are taxed on US source income only, whereas resident taxpayers are taxed in the same manner as US citizens and are subject to tax on their worldwide income. The amount of tax withheld/paid is dependent on the type of income received and individual’s tax residency.
Notwithstanding your tax residency status, individuals must file Federal and State tax forms.
International individuals present in the State of Virginia are deemed to be Virginia residents notwithstanding their tax residency status for federal tax purposes.
When determining tax rates for international students, researchers, and researchers present in the U.S. the University uses two tests:
The Permanent Residency (Green Card) Test The Substantial Presence Test
International individuals are considered residents (for tax purposes) on January 1 of the qualifying year, regardless of the month they arrived.
If the international individual does not satisfy either test they are considered a Non-Resident Alien (NRA) for tax withholding and reporting purposes. If the individual does satisfy one, or, both of the tests they are considered a Resident Alien (RA). A resident alien is subject to the same tax withholding and reporting requirements as a U.S. citizen or Permanent Resident, including taxation of worldwide income.
The following individuals are generally considered nonresident aliens:
Non-resident alien individuals are exempt from Medicare and Social Security (OASDI) taxes, commonly referred to as FICA taxes.
This exemption applies to F-1 and J-1 students, researchers, professors, and short-term scholars in non-resident alien status. H-1B, TN, E3, O-1 and LPR visa holders are never exempt from FICA withholdings.
More information about the FICA tax liability for foreign nationals can be found on the IRS website, https://www.irs.gov/individuals/international-taxpayers/foreign-student-liability-for-social-security-and-medicare-taxes.
If you are a non-resident and FICA taxes have been withheld from your wages please contact the Foreign National Tax Analyst.
Nonresident aliens, for tax purposes, unlike U.S. citizens and residents, are only subject to tax on income that is considered U.S.-source income.
Foreign-source Income received by a non-resident alien is not subject to U.S. taxation.
Income is generally considered foreign-source if the location of the activity for which the payment is being issued is outside the U.S. A clear indication of the location of the activity is necessary on all supporting documentation for the payment to be correctly classified.
If the source of income cannot be determined at the time of payment, such as when the location of the activity is not indicated, the payment must be treated as U.S. sourced under IRS Regulations.
Royalties, such as those paid for the use of intellectual properties (industrial properties and copyrights), are taxable and considered U.S. sourced if the subject property is used in the U.S.
Compensation for employment. In the U.S. wages are taxed at graduated rates, meaning the amount of tax withheld from an employee’s wages is based on how much they earn. For more information about federal income taxes see IRS Publication 15, https://www.irs.gov/forms-pubs/about-publication-15.
Students
Graduate Teaching Assistantships/ Research Assistantships, any authorized on Grounds employment.
For more information see “Withholding Adjustment for Nonresident Alien Employees" in IRS Pub. 15-T (2023), Federal Income Tax Withholding
*Students from India are exempt from this procedure.
Payroll Period Add Additional
Biweekly $532.70
Monthly $1,154.20
Withholding Adjustment for Nonresident aliens (NRA “Gross-up”)
The IRS requires employers to add to nonresident alien employee’s wages prior to calculating income tax withholdings.
Nonresident researchers, professors, lecturers, and short-term scholars’ wages are subject to:
Federal income tax
Virginia income tax
Researchers, Professors, Lecturers, and Short-Term Scholars
Salary, or, Hourly Wages.
Nonresident students’ wages are subject to the following taxes:
Federal income tax
Virginia income tax
Scholarship/Fellowship payments are generally considered Qualified and not taxable when the payment is applied to education related expenses. Scholarship/Fellowship are generally tax-free under the following circumstances:
The student is enrolled in a degree program at an accredited university The fellowship/scholarship is used to pay the following qualified expenses, unless the terms of the fellowship/scholarship state otherwise:
Often incorrectly referred to as stipends, these payments generally are subject to 14% federal income tax withholdings. These payments typically include any payment from UVA for living expenses beyond typical tuition charges. U.S.-sourced, taxable scholarships and fellowship grants for nonresident aliens may be withheld at either a 14% or 30% rate. Non-qualified payments made to nonresident aliens in F, J, M, or Q nonimmigrant status will be taxed at 14%. Payments made to nonresident alien individuals in any other immigration status are subject to 30% withholding.
Non-Qualified Scholarship/Fellowship payments are reported on Form 1042-S.
Prizes and awards are amounts received primarily in recognition of charitable, scientific, educational, artistic, literary, or civic achievement, or are received as the result of entering a contest. A prize or award is taxable to the recipient at a rate of 30% unless exempt due to a tax treaty.
Prizes and awards presented to nonresident alien individuals are reported on Form 1042-S.
University of Virginia Financial Operations
P.O. Box 400194
Charlottesville, VA 22904-4194
University of Virginia Financial Operations
1001 Emmet Street N.
Charlottesville, VA 22903
