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 exists 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 employees and grant recipients with certificate job titles. The data provided will determine the individual’s tax residency status, tax withholding, and tax treaty eligibility. The University utilizes separate software to conduct an analysis to determine tax treaty eligibility based on the information provided by the individual on the Foreign National Information Form (FNIF) during onboarding.
Tax treaty benefits can only be extended to foreign nationals that possess a valid US Social Security number:
- Receipts of application for a social security number are not sufficient for treaty purposes 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 department.
- The number can be uploaded through our secure upload site.
- No refunds will be granted by the Payroll Department for federal tax withheld prior to submission of the foreign national’s social security number.
Approved
- 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 income tax will be withheld from your pay until you sign your treaty acceptance paperwork.
- Payroll is unable to issue refunds for federal income tax withheld due to late signatures. Recipients who sign the required paperwork after federal income tax has been withheld may be able to claim a refund on their personal tax return. Refund eligibility is determined by the IRS.
- 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 feel you are treaty eligible and have not been notified to sign your documents.
Denied
If you are not eligible to receive a tax treaty benefit, a 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.
Helpful Tips
If you have a tax treaty benefit and you see Federal Income 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 paperwork:
- You may have exceeded your benefit limit.
- If you are a teacher or researcher, your treaty benefit may have a time limit, an annual dollar limit, or both.
- If you are a student, your treaty benefit may have a time limit, an annual dollar limit, or both.
- 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.