For federal income tax purposes, nonimmigrants are classified as resident aliens and nonresident aliens and are taxed at different graduated rates. Tax residency for federal tax purposes is determined by either the Substantial Presence Test or the Green Card Test. For information on determining your federal tax residency status, see Internal Revenue Service Publication 519, Chapter 1.
Federal tax is withheld from nonqualified grant payments issued to nonresident alien Post Doctoral Scholars. Visa holders in F-1 and J-1 status are taxed at 14%, unless a tax treaty benefit can be applied to the payment. Both treaty exempt and non-exempt grant payments are reported to the payee and the Internal Revenue Service on Form 1042-S. For information on determining the taxable portion of grant payments, see “Scholarships and Fellowship Grants”, IRS Publication 519, US Tax Guide for Aliens, Ch 3, p.16.
The University of Pittsburgh is not required to withhold or report grant payments issued to resident aliens. Like other US persons, resident aliens are responsible for reporting and paying any taxes on these payments directly to the Internal Revenue Service. If you are a resident alien, please refer to the US Tax Information page.
Tax treaties make it possible to reduce or eliminate federal tax withholding on payments to nonimmigrants. Eligibility requirements include tax residence status, prior visits to the U.S., and type of payment. Information provided on the Foreign National Information Form at the time of hire will be analyzed by the Payroll Department. If it is determined the employee is eligible for the treaty benefit, it will be applied to the employee’s pay in the manner specified in the treaty. To see if your country of tax residence has a tax treaty with the U.S., refer to the IRS tax treaty table in IRS Publication 901.
The amount taxable to you includes your fellowship payment plus the value of all University-provided benefits. These amounts are listed on your pay statement under the heading Taxable Fringe Benefits and combined for federal tax filing purposes on your 1042-S.
The State of Pennsylvania provides guidance on the taxability of fellowship grants under section b, line 5 of Title 61 Pa. Code §101.6. Local earned income taxability follows PA regulations for all municipalities, except Philadelphia.
If a Post Doctoral Scholar performs services for the University for which they receive compensation, this payment will be considered wages. Applicable taxes will be withheld and these earnings will be reported on a Form W-2.
Tax Treaty Benefits
Tax treaty analysis and the extension of tax treaty benefits is a service the University of Pittsburgh offers to eligible resident alien and nonresident alien payees. Tax treaties may reduce or eliminate a payee’s U.S. federal tax obligation for a period of time or up to an annual dollar limit. Tax treaties are not recognized by the state of Pennsylvania and are not applied to Pennsylvania state income tax.
If a treaty exits between the U.S. and the employee’s country of tax residence, and it contains an article for the type of income being paid, then the employee’s eligibility is determined. This determination is based on visa status, primary purpose and length of stay for both current and prior visits to the United States.
All resident aliens and nonresident aliens who receive payment through the University of Pittsburgh’s Payroll Department must complete a Foreign National Information Form. This includes individuals and grant recipients. The data provided will determine the individual’s tax residency status, tax withholding, and tax treaty eligibility. Approval of tax treaty benefits is based upon the data provided on the Foreign National Information Form and the guidance of the University of Pittsburgh’s external tax advisor.
Tax treaty benefits are extended only to foreign nationals that possess a valid US Social Security number.
- Receipts of application for a social security number are not sufficient due to the time required for the Social Security Administration to verify the individual’s employment authorization with US Citizenship and Immigration Services.
- Tax treaty benefits will begin after the social security number is given to the Payroll Office.
- The number can be uploaded through our secure site – https://apps.fis.pitt.edu/payroll/.
- No refunds will be granted by the Payroll Department for federal tax withheld prior to submission of the non-immigrant’s social security number.
- If you are eligible to receive a tax treaty benefit, notification will be sent to your Pitt email account. You will be given instructions for accessing and signing your treaty acceptance paperwork. A one month grace period is extended to all new treaty benefit recipients. To continue the treaty beyond that grace period, your signature is required.
- If you do not sign your documents by the required deadline, your treaty benefits will be suspended and federal tax will be withheld from your pay until you sign your treaty acceptance paperwork. Due to IRS regulations, Payroll is unable to issue refunds for tax withheld due to late signatures. Recipients who sign the required paperwork after federal tax has been withheld may be able to claim a refund on their personal tax return.
- Tax treaty eligibility is analyzed each December for the following tax (calendar) year. If you qualify for the treaty benefit, Payroll will notify you when your new acceptance paperwork is available for your signature. Contact your department by January 15th if you believe you are treaty eligible and have not been notified to sign your documents.
If you are not eligible to receive a tax treaty benefit, notification will be sent to your Pitt email account. The reason for denial will be given at this time along with notification of your tax residency status and instructions for completing your Form W-4.
If you have a tax treaty benefit and you see federal tax (FIT) withheld from your pay:
- Make sure you have signed your treaty papers by the deadline stated in your notification letter.
- Check the specifics of your treaty as stated on your treaty acceptance papers (IRS 8233). You may have exceeded your benefit limit. If you are a teacher or researcher, your treaty benefit will have a time limit. If you are a student, your treaty benefit will have a time limit and an annual dollar limit.
- If you recently extended the expected end date of your stay, your treaty benefit may have been stopped. Due to the benefit time limit, some treaties do not permit the benefit to continue after an extension has been processed.
Year End Information
Resident and nonresident aliens may receive Form W-2, 1042-S, or both depending on the type of income they have received, whether they have received a tax treaty benefit, and their tax residency status.
|Payment||Federal Tax Status||Resident Alien||Non-Resident Alien|
|Individuals receiving postdoctoral scholarships, predoctoral
fellowships and training grants
|No form issued
No form issued
W-2 forms are mailed by January 31.
1042-S forms are mailed by March 16.
Please allow up to two weeks for delivery for all tax forms.
Requests for duplicates of current year tax forms are accepted and processed as early as two weeks after their scheduled mailing. Forms for prior years can be requested any time. Submit an inquiry to begin the process.
How can I determine my tax residency?
For federal income tax purposes, non-immigrants are classified as resident aliens or non-resident aliens and are taxed at different graduated rates. Tax residency for federal tax purposes is determined by either the Substantial Presence Test or the Green Card Test. The Payroll Department uses the information you provide on your Foreign National Information Form to determine your tax residency for you.
For information on determining federal tax residency status, see Internal Revenue Service Publication 519, US Tax Guide for Aliens, Chapter 1. For information on determining your tax residency in Pennsylvania, see PA Department of Revenue REV-611.
How does my tax residency affect my tax withholding?
Tax residency status affects federal, state and local income tax withholding. It is also one of the factors used in determining whether FICA (social security and Medicare) will be withheld. Certain taxes are withheld regardless of tax residency status.
What are the criteria for receiving a tax treaty benefit?
When a treaty exits between the U.S. and the employee’s country of tax residence, it must contain an article for the type of income being paid. If these initial requirements are met, then the specifics of the employee are considered. These include tax residency status, prior U.S. visits (visa status, primary purpose and length of stay), and current visit details. Payroll tax treaty benefits are granted only to foreign nationals that possess a valid US Social Security number.
How do I apply for a tax treaty benefit?
The information provided by the employee on the Foreign National Information Form at the time of hire is used to determine tax treaty eligibility. Since the form is also used to determine tax residency status, it is required for all individuals, not just those applying for a treaty benefit.
How will I know if I am eligible for a tax treaty benefit?
If you are eligible to receive a tax treaty benefit, notification will be sent to your Pitt email account. You will be given instructions for accessing and signing your treaty acceptance paperwork. A one month grace period is extended to all new treaty benefit recipients. To continue the treaty beyond that grace period, your signature is required.
Will I get the tax treaty benefit next year?
Tax treaty eligibility is determined each December for the following tax (calendar) year. If you qualify for the treaty benefit, Payroll will notify you that your new acceptance paperwork is available for your signature. Contact your department by January 15th if you believe you are treaty eligible and have not been notified to sign your documents.
I have a treaty benefit. So, why are taxes withheld from my pay?
The state of Pennsylvania does not recognize tax treaty benefits, which means that tax treaty benefits apply to federal income tax only. Depending on your tax residency status and job title, you may be subject to other tax withholding. These taxes include Social security and Medicare (FICA), state and local income, local services, school district and state unemployment. For more information, see Taxes by Tax Residency.
Does my visa class affect my taxation?
Current visa status, along with the details of any prior visits to the U.S. you may have had, is used in determining your tax residency status. Tax residency status is one of the major criteria for receipt of tax treaty benefits. It also determines where you pay local income tax and what the rate will be. Generally, nonresident aliens in F-1 and J-1 visa class are exempt from Social security and Medicare. F-1 and J-1 visa holders are also given a reduced tax withholding rate on their appointment-related scholarships and fellowships.
How do I update my visa classification with the Payroll Department?
Notify your department administrator any time your visa class changes or the expiration date of your current visa status is extended. In the event that your new authorization has not been received before your current authorization expires, you may be asked to provide a copy of your receipt of application for extension and a letter from OIS confirming timely application has been made.