Payroll Tax for Non-Resident F-1 & J-1 VISA Holders

Learn how to manage payroll taxes for employees that hold F-1 and J-1 VISA.

Payroll taxes for non-resident aliens are different than taxes for U.S. citizens. Many countries have tax treaties with the U.S. which allow non-resident aliens an exemption from all or part of federal tax withholdings. Different types of visa holders get certain exemptions from federal tax and FICA/Medicare tax. An F-1 visa is specifically for full-time students who come to the U.S. to study at an accredited college or university. These students can also apply for Optional Practical Training (OPT) in their major field of study which allows them to remain in the U.S. for an extended period of time after they have completed their studies. A J-1 visa is similar to an F-1 visa but is for teachers and researchers in a specific field of study for a specific amount of time. The F-1 and J-1 visa holders are both exempt from FICA/Medicare tax if they become employed for personal services while in the U.S. They may also be exempt from federal tax withholding if their country has a tax treaty with the U.S. Some treaties exempt all wages from tax and others have specific dollar limits that can be earned before they are subject to taxes. This course will review what employers need to know about managing payroll taxes for these employees, what forms they need to complete to receive a tax treaty exemption, the specific forms that must be filed at the end of the year, and what to do if there is not a tax treaty in their country.