Under the new Tax rules, personal exemptions are no longer permitted beginning with tax year 2018. What this means is that your international staff, who might otherwise have been exempt from US Federal Income Tax, now has taxable / reportable income in the US and employers are now required to withhold tax.
This is a requirement, not an option.
What this means:
An international staff member, the individual must complete Form W-4, taking into account the Supplemental Form W-4 Instructions for Nonresident Aliens (a). Notice 1392 provides those supplemental instructions, a copy of which is attached. Notably, in order to complete the Form W-4, the individual is required to obtain a US social security number. The nonresident alien is required to file Form 1040NR (due April 15th of the following year).
(a) Nonresident alien employee’s Form W-4. When completing Forms W-4, nonresident aliens are required to:
• Not claim exemption from income tax withholding;
• Request withholding as if they’re single, regardless of their actual marital status;
• Claim only one allowance (if the nonresident alien is a resident of Canada, Mexico, or South Korea, or a student or business apprentice from India, he or she may claim more than one allowance); and
• Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4.
International Staff will also be required to submit IRS form 1040NR by April 14th of the year following employment
This also means that as an employer, camp will be required to mail out W-2’s directly to each international staff member at the end of the tax year.
Camps are responsible for making sure they have the appropriate contact details to make this happen.
Important takeaways summarized:
- International Staff MUST obtain a Social Security number
- Camps MUST deduct taxes from their paycheck
- Camps ARE REQUIRED TO mail W-2’s to each staff member
- Each staff member IS REQUIRED TO submit tax returns via form 1040NR