University Accounting Services

Non-Resident Alien Tax Information

California State Polytechnic University, Pomona (Cal Poly Pomona) is required by federal law, Treasury Regulation 26 CFR Section 1.1441-1, to withhold and report U.S. tax on payments made to or on behalf of a nonresident alien. The payment types which require tax withholding and reporting include, but are not limited to:

  • Compensation: performing services, which includes employment
  • Travel Reimbursements
  • Prizes and Awards
  • Taxable Scholarships and Fellowships
  • Royalties and Commissions
The University is committed to ensuring full compliance with all applicable U.S. tax laws.
Please note: We cannot assist students/scholars with personal tax matters or questions. Any questions or concerns should be directed to a certified tax preparer.

A foreign national is anyone who is not a U.S. Citizen or a legal permanent resident of the United States. Foreign nationals have two tax classifications: nonresident and resident.

1. Green Card Test: Should the foreign national have a Green Card or a Legal Permanent Residence Card (USCIS I-551), the foreign national is a U.S. Resident for income tax purposes. If the foreign national does not have a Green Card, the Substantial Presence Test applies.

2. Substantial Presence Test: This test consists of two parts.

31 Day Test: If the foreign national is present in the United States for 30 days or less the entire calendar year, then the foreign national is a Nonresident for U.S. tax purposes.

183 Day Test: Add the following:

1. The number of days present this year.
2. The number of days present last year multiplied by 1/3.
3. The number of days present two years ago multiplied by 1/6.

If the sum is 183 days or greater then the foreign national is a Resident Alien for income tax purposes. Otherwise, the foreign national is a Nonresident for tax purposes.

Some important exceptions to the substantial presence test:

1. Students who are in the United States with an immigration status of F, J, M, or Q may be exempt from counting days for the Substantial Presence Test for up to five years. If this exception applies, the taxpayer will be required to file IRS Form 8843 in addition to any other required tax returns.

2. Teachers and trainees who are in the United States with an immigration status of J or Q may be exempt from counting days for the Substantial Presence Test for up to two years, depending on their history for the current and last six years. If this exception applies, the taxpayer will be required to file IRS Form 8843 in addition to any other required tax returns.

3. If a foreign national is merely commuting between the United States and Canada or Mexico, each day of commute is not subject to the Substantial Presence Test.

  • There are restrictions for foreign national employees whom are hired by Cal Poly Pomona. Each is required to complete a "default" EAR (Employment Action Request) as follows: Single and 1 Allowance. The "default" EAR is enforced and is pending on a tax analysis for each employee. If the employee is determined to be a resident alien or a tax treaty benefit applies, an additional EAR will need to be completed.
  • School Departments: If you are planning to pay a foreign national any kind of stipend, consider contacting the University Tax Specialist to determine any tax implications of each transaction. Each situation is unique. Please have available the payee name, dollar amount to be paid, what the payment is for, and contact information when contacting the Tax Specialist for guidance.
  • Stipend vs. Scholarship: Stipends involve the student performing required services to receive payment, while scholarships do not involve any required services to receive payment.
  • Prizes and contest awards are not scholarships. For nonresident aliens, 30% federal withholding applies.

In general, travel reimbursements paid to nonresident aliens are subject to 30% withholding.

However, if the travel is part of a payment for compensation and the Accountable Rules are followed, reimbursement will not be subject to withholding.

The United States has income tax treaties with over 60 countries. The purpose of the tax treaty is to eliminate double taxation of the income the foreign nationals earn. Each tax treaty is unique.

There are various forms in which benefits from tax treaties can be claimed:

Form 8233

  • Employees' wages and salaries
  • Independent Contractor payments for services
  • Form 8233 must be forwarded to the IRS. In the event discrepancies are noted on the form, the IRS will contact the withholding agent.

Form W-8BEN

  • A student claims tax treaty benefits for scholarships.
  • An individual claims tax treaty benefits for interest, dividends, rents, royalties.
  • The W-8BEN is kept with the withholding agent.

Form W-8BEN-E

  • This form is for non-individual entities to claim tax treaties for certain types of income.
  • The W-8BEN-E is kept with the withholding agent.
Please be aware that tax treaties only affect federal income tax. Tax treaties do not affect state income tax, social security, Medicare, or sales tax. All tax treaty benefits are reported on IRS Form 1042-S.

Scholarships: Not all scholarships are tax-free. The taxability of scholarships is dependent on what the scholarship pays.

Qualified Expenses under IRC Section 117

  • Tuition
  • CSU fees
  • Books and supplies required for classes

There is no tax on these scholarships for the recipient.

What about taxable scholarships? Taxable scholarships include:

  • Room and Board
  • Unrestricted Cash Payments
  • Travel Expenses
  • Miscellaneous, Food, Everyday Supplies

For a payment to qualify as a scholarship, the student cannot be required to perform any kind of service. For foreign nationals, Cal Poly Pomona may be required to withhold 14% or 30% of any taxable scholarship. The 14% applies to students with an F, J, M, or Q visa. If the scholarship is processed through the University, it may be reported on the student's 1098-T Tuition Statement.

Form 1042-S is an information return that reports amounts paid to foreign persons of income subject to nonresident alien withholding requirements. The form also reports amounts that are exempted from reporting as allowed by U.S. tax treaties. When required, the 1042-S is generally issued to the recipient during January through March of the preceding tax year. If applicable, the University will provide the payee with the 1042-S.

Qualified scholarships under IRC Section 117 and taxable wages are not reported on the 1042-S.

The requirement for the withholding agent to withhold and report payments made to foreign nationals: 26 CFR Section 1.1441-2(b)(2)

Qualified scholarships: 26 U.S. Code Section 117

United States Income Tax Treaties - IRS Publication 901