Nonresident aliens working in the United States must comply with specific tax withholding requirements when completing Form W-4, the Employee's Withholding Certificate. This guide explains the special provisions that apply to foreign workers receiving compensation for personal services.

Determining Tax Residency Status

Your tax obligations begin with properly establishing your residency status. International students, trainees, and foreign employees generally qualify as nonresident aliens unless they meet either the "green card test" or the "substantial presence test." Dual-status individuals who have elected treaty benefits under a tax agreement may also be treated as nonresident aliens for tax purposes. Additional guidance is available in IRS Publication 519, U.S. Tax Guide for Aliens.

Income and Withholding Requirements

Compensation for personal services performed in the U.S. by nonresident aliens is subject to graduated withholding. This includes wages, salaries, bonuses, and certain scholarship or fellowship payments. Those eligible for treaty-based exemptions should complete Form 8233 (Exemption From Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual) rather than Form W-4.

All nonresident aliens must file Form 1040-NR to report their U.S. income and potentially claim refunds for any over-withheld taxes.

Special Instructions for Form W-4

Nonresident aliens completing Form W-4 should pay particular attention to these requirements:

  • Personal information: Provide your Social Security Number (SSN) in Step 1(b). Those without an SSN must contact the Social Security Administration to determine eligibility.
  • Filing status: Select either "Single" or "Married filing separately" in Step 1(c), regardless of actual marital status.
  • Multiple jobs: Complete Step 2 only if you hold multiple concurrent positions. Note that you cannot claim withholding allowances for a working spouse.
  • Deductions: Most nonresident aliens cannot claim the standard deduction. In Step 4(c), clearly indicate "Nonresident Alien" or "NRA" to ensure proper withholding.

Exceptions and Special Cases

Some nonresident aliens qualify for withholding exemptions, including:

  • Foreign employees earning ≤$3,000 annually who spend ≤90 days in the U.S.
  • Residents of treaty countries (Canada, Mexico, Singapore, or India) who meet specific conditions

For comprehensive guidance, consult IRS publications including Publication 519, Form 8233 instructions, and Publication 15-T. Understanding these requirements will help ensure compliance and prevent tax-related complications during your U.S. employment.