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ITG FAQ #23 Answer-What amount should I withhold on a foreign student working as an employee?

Employees working as nonimmigrant aliens (students, scholars, trainees, teachers, etc.) under § 101(a)(15)(F), (J), (M), or (Q) of the Immigration and Nationality Act are exempt from social security and Medicare taxes if the service is performed for purpose specified in that section of the law. These aliens will hold an F-1, J-1, M-1 or Q-1 visa. Please note that social security and Medicare taxes may apply if the employee becomes a resident alien. (Reference: Publication 15, Circular E, Employer's Tax Guide, section 15, Special Rules for Various Types of Services and Payments.)

These employees are subject to income tax withholding unless excepted by regulations. For income tax withholding, refer to Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. The definition of foreign persons is found under Persons Subject to NRA Withholding section and the qualifications for nonresident and resident aliens are also discussed. The amount of and whether there will be a requirement to withhold Federal income tax will depend if there is a tax treaty between the foreign person’s country of residence and the United States. If there is no treaty or no exemption provision in the treaty, you should withhold at a rate of 30 percent.

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Page Last Reviewed or Updated: 29-Jan-2014