Key Terms -- International Tax

1042S    

Foreign Person’s U.S. Source Income Subject to Withholding; issued at end of year to persons with any nonwage payments and taxes and to persons with wages that were exempt from tax withholding due to a tax treaty.

FICA

FICA (Federal Insurance Contributions Act) tax is made up of two pieces, OASDI (Old Age, Survivors, and Disability Insurance) that funds Social Security, and the piece devoted to Medicare. You may hear the terms ‘Social Security Tax’ and ‘Medicare’ Tax.  The two referred to together is FICA tax.

Form 8233          

Exemption from Withholding on Compensation for Independent (and certain Dependent) Personal Services of a Nonresident Alien Individual; used by persons receiving wages to claim treaty benefits and to guest speakers or consultants claiming treaty benefits.

The Vanderbilt International Tax office uses Glacier software to collect immigration information which calculates the substantial presence test.  The result is based on the immigration data entered by the individual.  If the person passes the substantial presence test, he or she is treated as a U.S. person for tax purposes.

I-9 Form

I-94, I-94W         

White or green card issued to every international person arriving in the U.S.; documents legal arrival, status, and length of stay.  (White is for persons with visas; green is for persons from visa waiver countries).

If the person is not a U.S. Citizen or permanent resident, two sets of laws must be taken into consideration.

• Immigration law determines what an individual in each specific visa type can do, whether or not any payment is to be made.
  

• If the person is allowed to perform services and a payment will be made, IRS Regulations determine if the payment is potentially taxable and /or reportable, and whether it must be considered wages or can be considered as payment to a contractor.

IRS                      

Internal Revenue Service (IRS) is the agency in the U.S. Department of the Treasury responsible for enforcing the internal revenue laws.

ITIN        

Individual Taxpayer Identification Number; Issued to individuals not eligible for a SSN, but who have tax filing requirements or wish to file for a refund, where applicable.

A person who is not a United States citizen or permanent resident, and has not met the substantial presence test.

A permanent resident is a person who has been granted permission to remain in the United States indefinitely, so long as they continue to meet the qualifications or elect to relinquish the status. These individuals are also known as 'green card' holders.

A person who is not a United States citizen or permanent resident, but has met the substantial presence test.

A mathematical test used to determine residency in the United States for tax purposes. For more information, see the section on Substantial Presence, under "Determining a Foreign Individual's Tax Status".

SS-5                    

Application for a Social Security Card

SSA                    

Social Security Administration; agency where SS-5 is filed to obtain an SSN

SSN                    

Social Security Number

A U.S. Citizen is a person born in the United States or who meets specific criteria related to birth and parents. A U.S. Citizen may be a person who is 'naturalized' by meeting certain criteria.

VISA status        

Visa Classifications used by U.S. citizenship and Immigration Services that define the reason for the person coming to the U.S. and defining the nature of any services, for whom they can be performed and what remuneration can be received. There are many, covering most alphabet letters, often with several subcategories within the alphabet letter.  The most common seen on campus are F-1(students), J-1(students or non-student exchange visitors), H-1B, O, or TN temporary workers.  

W-2       

Employer Wage and Tax Statement issued to persons with wages at end of each year for use in filing a tax return.

W-4       

Employees Withholding Allowance Certificate; provided to employer to determine amount of tax to withhold from wages.    (Special rules for nonresident aliens)

W-7       

Application for Taxpayer Identification Number; persons receiving payments but who do not qualify for a SSN must apply for an ITIN.

W-8BEN            

Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding; most often used here for persons claiming tax treaty benefits for stipends.  May be used by a foreign company to claim tax treaty benefits for services performed in the U.S.

W-8ECI

Certificate of Foreign Person’s Claim for Exemption from Withholding on Income Effectively Connected with the Conduct of a Trade or Business in the United States. Used by foreign companies to claim an exemption from withholding based on the fact they are registered to do business in the U.S. and are required to file a tax return based on business profits.

W-9       

Request for Taxpayer Identification Number and Certification; required of all persons receiving wages.

WB/WT              

Persons arriving from countries participating in the Visa Waiver Program; No visa is required.  Form I-94W is issued upon arrival that will be stamped W-B (waiver -business) or WT (waiver-Tourist) or WB/WT.  These are the equivalent of the B-1 and B-2 visa.  These visa categories will often be used by persons with guest speaking engagements.