Glossary of Tax and Immigration Terms

Candidate for a Degree
Department of State
Employee Wages
FICA
Foreign National
Green Card
Honorarium
Immigrant
Immigration and Customs Enforcement
Internal Revenue Service
Resident/Nonresident Alien for Immigration Purposes
Resident/Nonresident Alien for Tax Purposes
Scholarships and Fellowships
Stipends
Teaching and Research Assistantships
U.S. Citizenship and Immigration Services
U.S. Customers and Border Protection
Visa
Visa Waiver Program
Withholding
Work Authorization

Candidate for a Degree

The term "candidate for a degree" refers to a student (full or part time) who:

• Attends a primary or secondary school or is pursuing a degree at a college or university, or
• Attends an educational institution that is authorized or accredited to provide a program that is acceptable for full credit towards a bachelor's or higher degree, or to provide programs of training to prepare students for gainful employment in a recognized occupation.

Department of State

The Department of State (DOS) operates through U.S. consulates and embassies outside the U.S., and has exclusive authority to issue visas. Visas do not guarantee admission to the U.S. but only allow a foreign national to present himself/herself to U.S. Customs and Border Protection (USCBP) for entry into the states. Entry will be granted if USCBP finds that the person's intent conforms to the visa; i.e., a person with a tourist visa is visiting and is not actually intending to go to school or work in the U.S.

Employee Wages

Employee wages are payments for services that an individual performs or carries out for the university as an employee. Services performed by an employee are subject to the direction and control of the university, faculty, or staff. Employee wages are not the same as payments made to a foreign national for independent contractor services.

Employee wages can only be paid to foreign nationals who have been granted an appropriate employment authorization and visa status by USCIS that allows them to be compensated for services.

FICA

FICA (i.e., Federal Insurance Contribution Act) is a tax that is assessed against employee wages paid to individuals who are residents for tax purposes. This tax is separate from the federal income tax. Monies collected from the FICA tax are used to fund the retirement and medical benefits paid by the Social Security Administration. One half of this tax (7.65% of wages earned) is withheld from the payments to the employee, while the university pays the other half (7.65% of wages earned). It is important to note that rules regarding FICA tax liability are not the same for every visa classification.

Foreign National

A Foreign National can be either an immigrant, permanent resident, "green card" holder, a non U.S. citizen or permanent resident of the U.S. who has been admitted for either a temporary stay or with authorization to live and work in the U.S. indefinitely.

Green Card

A green card is a life-long visa that allows a foreign national to live and work in the U.S. indefinitely. The official title of the card is "Permanent Resident Card" and, as it so happens, the card is not green. The card itself is a government-issued plastic identification card that serves as proof of this permanent resident status. In size and format, it generally resembles a driver's license. It is also known as the I-551 card. A green card is not citizenship. A green card can be revoked if a person does not maintain permanent residence in the U.S., travels outside the country for too long, or breaks certain laws.

Honorarium

An honorarium is generally a payment to an individual possessing recognized professional or scientific credentials which uniquely qualifies him or her to be a guest lecturer, speaker, seminar participant or leader. The fee is determined by the sponsoring department and is paid on a voucher prepared by the department rather than on an invoice submitted by the individual performing the service. No admission can be charged at an activity for which an honorarium is paid. The fee is subject to reporting and withholding rules that apply to compensation.

Immigrant

An immigrant is someone who has been lawfully admitted to the U.S. for permanent residence. An immigrant may also be referred to as a green card holder, resident alien or permanent resident. An immigrant has the same rights and obligations as a U.S. citizen with the exception of voting and holding certain public offices.

Immigration and Customs Enforcement

The Immigration and Customs Enforcement (ICE) is a part of the U.S. Department of Homeland Security. ICE is primarily responsible for enforcing U.S. immigration laws and regulations.

Internal Revenue Service

The Internal Revenue Service (IRS) is the U.S. government agency that is responsible for collecting taxes. The IRS issues a range of information including various forms, withholding allowance certificates and income tax returns to help foreign nationals pay the taxes that apply to them. The IRS also determines whether an organization that pays income to a foreign national is required to withhold specific amounts from that income.

Resident/Nonresident Alien for Immigration Purposes

A resident alien for immigration purposes is the same as an immigrant, permanent resident or "green card" holder. A resident alien can be defined as a non U.S. citizen who has been authorized to live and work in the U.S. indefinitely.

A nonresident alien for immigration purposes is a person who is not a U.S. citizen or permanent resident of the U.S. and who has been admitted for a temporary stay that will end when the purpose of that stay has been met.

Resident/Nonresident Alien for Tax Purposes

A resident alien for tax purposes is not a U.S. citizen and meets either the "green card" test or the "substantial presence" test described in IRS Publication 519, U.S. Tax Guide for Aliens. A resident alien must pay tax to the U.S. government on income from all sources, worldwide, and may in certain limited circumstances claim benefit of tax treaty exemptions. Individuals who are resident aliens for tax purposes can claim exemptions for dependents. A resident alien for tax purposes annually files a return using IRS form 1040, 1040A, or 1040EZ on or before April 15th.

A nonresident alien for tax purposes is not a U.S. citizen and does not meet either the "green card" test or the "substantial presence" test." A nonresident alien for tax purposes, during his or her stay in the U.S., either pays U.S. taxes, only, on income from sources inside the U.S.; or is exempt from paying U.S. income taxes because of a treaty between the U.S. and the government of his or her country of tax residency. Most nonresident aliens receive no tax exemption for dependents. A nonresident alien for tax purposes must file an income tax return using IRS Form 1040NR or Form 1040NR-EZ on or before April 15th.

NOTE: Categories established for immigration purposes do not necessarily coincide with those created for tax purposes. Under certain circumstances, a nonresident alien for immigration purposes may be a resident for tax purposes. Thus, students and scholars who are not citizens of the U.S. must take care to determine whether they are resident or nonresident aliens for tax purposes. Only then will they know how their income will be taxed and which income tax return form to file. For current information on tax laws regarding resident and nonresident aliens, IRS Publications 513, 515, 519 and 901 should be consulted.

Scholarships and Fellowships

The Internal Revenue Service defines a scholarship or fellowship grant as an amount given to an individual for study, training, or research, and which does not constitute compensation for personal services.

Stipends

Scholarship and fellowship payments that are used for meals, lodging, non-mandatory medical insurance, travel, personal living expenses, or other non-course related expenses are often referred to as stipends. A stipend may also be awarded independent of a scholarship or fellowship.

Teaching and Researching Assistantships

The terms teaching assistantship ("TA") and research assistantship ("RA") are used to refer to graduate teaching and research positions. These positions involve work for compensation (wages), which is generally subject to U.S. withholding taxes. Most students will also receive tuition waivers applicable to the quarter for which they receive the TA/RA appointment. These waivers are usually not subject to U.S. withholding taxes.

U.S. Citizenship and Immigration Services

U.S. Citizenship and Immigration Services (USCIS), part of the U.S. Department of Homeland Security, is responsible for the administration of immigration and naturalization adjudication functions and establishing immigration services policies and priorities.

U.S. Customs and Border Protection

The U.S. Customs and Border Protection (USCBP), part of the U.S. Department of Homeland Security, is responsible for admitting foreign nationals into the U.S. Upon admission, which usually happens after presenting a visa issued by the DOS, USCBP issues to foreign nationals their non-immigrant status appropriate for the purpose of their travel to the U.S.

Visa

A visa is an official endorsement of a passport indicating the owner is eligible to enter into or to cross a particular country, but not automatically guaranteed admission. The entry visa is stamped in the foreign national's passport by a U.S. consular officer abroad. The stamp indicates the visa type, the period during which the traveler may enter the U.S. and the number of entries permitted. The stamp may only be obtained outside the U.S. At the port of entry, a U.S. immigration officer of the Department of Homeland Security decides whether to allow the foreign national to enter and how long the person can stay for any particular visit.

Visa Waiver Program

Foreign nationals from certain countries in the Visa Waiver Program can travel in the U.S. for business or tourism without a visa for up to 90 days. The foreign national must have a machine-readable passport. Foreign nationals are not permitted to extend their stay or change their status. A description of the program and list of the countries is at http://travel.state.gov/visa/temp/without/without_1990.html.

Withholding

Withholding refers to the taxes a foreign national is obligated to pay to the U.S. government. Withholding is taken out of the paycheck or stipend check issued by the UW, then sent to the U.S. government as required by law. Withholding is not automatic. Employees must complete a Form W 4 and submit it to the employer to instruct the Payroll Office how much to withhold. Extreme caution should be exercised in filling out the form, as errors could result in having to pay back taxes, fines or penalties. In addition, nonresident aliens for tax purposes must follow specific procedures, defined by the IRS, when completing this form.

Work Authorization

Work authorization is associated with visa status and specifies what type of employment, if any, a foreign national may have. Most foreign nationals at the UW have visas which narrowly limit what employment they are authorized to take.