Frequently Asked Questions
Tax Withholding Forms W4 and CT-W4
Q. I just noticed that my employer started deducting CT tax from my paycheck. Prior to that, I had been receiving full amount. I was wondering if I hadn't filed some the proper forms. Could you please explain this to me? Thank you.
A. If you previously claimed exemption from Connecticut tax withholding, you are required to update your state tax withholding form CT-W4 each year, before February 16th, you should have received an email notice from the Payroll office. You can update your form in the Payroll office located at 155 Whitney Avenue, Room 100.
Q. I recently completed Form W-4 in the Payroll office. I am a new post-doc in pharmacology department and the Payroll office returned Form W-4 to me along with a letter stating that I am classified as a nonresident alien for tax purposes. In fact I am currently a 'green card holder' and have the permanent resident status. Can you please check to see what needs to be done to correct that?
A. In order to correct your tax residency status in the Tax Office files, please send to us a copy of your green card, once the Tax Office receives this document we will update your record. You will also need to complete and submit a new Form W-4 to the Payroll office.
FICA Tax Withholding
Q. When I filed the last year's tax return, I found there was Social Security and Medicare (FICA) tax withholding on Form W-2. However, since I am an international student holding F-1 visa, I am not subject to FICA taxes, it this correct?
A. For an individual to be exempt from FICA tax under IRS section 3121(b)(19),
the individual must be: A nonresident alien; Present in the U.S. under an F, J, M, or Q immigration status; Performing services in accordance with the primary purpose of their immigration status (e.g., under the "-1" status and legally employed).
If you meet all of these criteria you can request a refund from your employer.
Foreign Source Income
Q. I am a nonresident alien student under F-1 visa status, I was granted $2,000.00 from Leitner and $620.00 from the Program in Agrarian Studies. Both fellowship grants will be used for research/study outside the U.S. Are these fellowships taxable?
A. The IRS regulations state that scholarship and fellowship payments will be “sourced” based on the location of the payor; except when the U.S. based payor makes payments to a nonresident alien to study or conduct research outside the U.S.; these payments are treated as “foreign source income”, not subject to tax or reporting to the IRS.
Stipend/Fellowship Tax Withholding
Q. I receive semimonthly graduate student stipend. I am on J-1 student status and I am a nonresident alien. What is the tax rate of withholding 14% or 30%?
A. The taxable portion of your stipend will have a 14% tax withholding. The reduced tax rate of 14% requires that the grantee be (i) a nonresident alien temporarily present in the U.S. under an F, J, M or Q immigration status (either “-1” primary status or the “-2” dependent status) and (ii) the recipient of the stipend, scholarship or fellowship grant. Stipends, scholarships and fellowships are considered non-service payments.
Q. I am a tax resident of China, I am a student on F-1 visa. I noticed there is federal tax withholding in my paycheck; however, there should not be any tax withholding since there is a tax treaty with China for the $5,000 of salary. How can I correct the federal tax withholding?
A. In order to be exempt from federal tax withholding first you must submit to the Tax office Form 8233 Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. Once the Tax office receives your properly completed and signed Form 8233 you can be exempt from federal tax withholding effective ten (10) days after the Tax office sends this form to the IRS.
Q. I sent Form 8233 to our foreign lecturer to fill out, sign, and return so that I could process his (second) payment without taxes taken out. The original wire and CR I sent over did not include this form because I was not aware that the U.S. had a tax treaty with Norway. At any rate, I need to rewire him more money because his first payment ended up being taxed $900 (30%). Can I submit Form 8233 after he already received and cashed his check?
A. Federal taxes are not deducted from the payment only if the check request documentation includes a properly completed Form 8233. Norway does have a tax agreement with the U.S. for independent personal services, Article 13. Since he already received the payment, at this point he can file a federal tax return for the year in question (Form 1040NR, if nonresident alien) and claim a tax refund pursuant to the treaty with Norway. He will receive Form 1042-S from the University stating the amount of the payment as well as the taxes withheld. The University cannot refund taxes properly withheld at the time of payment.
Q. Can my wife on J-2 visa status claim the tax treaty benefit between U.S. and Germany?
A. No, the primary purpose of a J-2 status individual is to accompany the spouse or dependent (i.e., J-1). There are no tax treaties that allow exemption for these individuals; therefore, your wife is subject to withholding federal tax at the standard nonresident alien rates.
Q. I know that my country, France, has a tax treaty agreement with the U.S. What do I need to do to be exempt from U.S. tax under the treaty?
A. The existence of an income tax treaty does not mean that you will automatically qualify for the tax exemption. You must meet the qualifications for the tax exemption as set forth in the tax treaty, you also need to file the appropriate forms in a timely fashion.