U.S. Tax Responsibilities of Foreign Nationals
Tax Identification Number (SSN or ITIN)
Filing an Income Tax Return with the IRS
Claiming an Exemption from Tax Due to a Tax Treaty
Certificate of Compliance or "Sailing Permit"
Penalties and Sanctions

U.S. Tax Responsibilities of Foreign Nationals

A foreign national's tax responsibilities are complex. This site is intended to aide departments and foreign nationals about the tax reporting and withholding responsibilities associated with their tax classification.

Significant differences exist between how residents and non-residents in the U.S. are taxed. The basic characteristics of non-resident alien taxation follow:

• Tax is generally levied on U.S. source income only.
• Tax treaty provisions may exempt some income from tax.
• Interest income may be tax free.
• A nonresident alien for tax purposes cannot file jointly with his or her spouse.
• Generally only one personal exemption is allowed regardless of family status.
• No standard deduction is permitted except by India.
• Itemized deductions are limited to:
  • State and local taxes withheld
  • Contributions to charity
  • Casualty/theft losses
  • Miscellaneous business duductions
• Investment income is generally taxed at a flat 30% rate.
• No child or dependent care credit is permitted.

A number of special rules regarding the standard deduction and spousal exemptions are in effect for residents of certain countries including India, Canada, Mexico, Japan, and Korea. Residents of these countries should contact the UW Payroll Office for additional information on these rules.

Tax Identification Number (SSN or ITIN)

A foreign national must obtain a Social Security Number (SSN) to be paid as a UW employee. To claim only a tax treaty benefit or file for a tax return, an Individual Tax Identification Number (ITIN) is necessary.

See the section, Tax Identification Number (SSN or ITIN) , for details about applying for a SSN or ITIN.

Filing an Income Tax Return with the IRS

There are specific rules about filing an income tax return with the IRS that nonresident and resident aliens must follow.

Claiming an Exemption from Tax Due to a Tax Treaty

Foreign nationals from certain countries may be entitled to a reduced rate for income tax withholding or to claim a tax exemption under an applicable tax treaty between their country and the U.S. At present, the U.S. has treaties with 56 countries and each one is different.

Check the list of current income tax treaties for the specific activity below to see if a tax treaty benefit is available.

NOTE: Citizens of Hong Kong and Macao are not covered by the People's Republic of China tax treaty.

If you do qualify for a tax treaty benefit, ask your sponsoring department to give you the necessary paperwork to apply for the benefit.

Certificate of Compliance or "Sailing Permit"

Before leaving the U.S., almost all aliens must obtain a "Certificate of Compliance" that demonstrates the individual has paid all applicable U.S. tax. This certificate is also called a "sailing" or "departure" permit. The requirement applies to:

Holders of F-1 and J-1 visas are not required to obtain the Certificate of Compliance if they had no U.S. source income other than allowances or payments to cover study expenses (including travel, maintenance and tuition) or wages from authorized work (including practical training).

The departing alien must complete one of the following forms depending on whether or not tax is owed:

The appropriate form should be filed with the IRS at least 14 days before departure but no more than 30 days before leaving the U.S. More information is available in Publication 519, U.S. Tax Guide for Aliens.

Penalties and Sanctions

Failure of a foreign national to comply with the U.S. tax law can lead to the imposition of fines and penalties to be assessed by the IRS. Failure to file the appropriate tax returns or making intentionally false or misleading statements on these returns can lead to criminal penalties.