1120.1 - University of North Carolina at Chapel Hill Procedure on Determining Tax Status of Foreign Nationals

Procedure

Foreign nationals will complete tax forms based on the criteria set forth from the University. This criteria is determined by the federal immigration and tax laws.

1. Under U.S. immigration laws, an "immigrant" is a nonresident alien admitted to the U.S. on a permanent basis who has been issued a green card. A "non-immigrant" is a nonresident alien who has been admitted to the U.S. on a temporary basis and has been issued a visa defining the person's purpose in residing temporarily in the U.S. (e.g., an "F" visa is for students, a "J" visa is for a teacher or researcher).
2. Under U.S. tax laws, a "resident alien" is a foreign national who holds a green card or passes the Substantial Presence Test, as defined below. All other foreign nationals are classified as "nonresident aliens" for tax purposes.
3. A nonresident alien, however, is subject to an entirely different tax regulation and is taxed only on the income that s/he derives from U.S. sources (e.g., working as an employee in the U.S.).

Forms and Instructions

In concordance with the procedure statement, here are the classifications and guidelines for the above categories:

1. A non-immigrant whose classification changes to "immigrant" status must notify and file a Foreign National Information Form (UNC Form PR100) with International Student & Scholar Services (ISSS).
2. In general, resident aliens are required to file taxes in the same manner as U.S. citizens, using Internal Revenue Service (IRS) Form 1040 or IRS Form 1040-EZ to report income.
3. If a nonresident alien is required to file a U.S. tax return, s/he is required to use IRS Form 1040-NR or IRS Form 1040-NR-EZ.

Related Requirements

External Regulations and Consequences

• Finance Related Data 1120.1.1rd - Visa Type and Tax Status of Nonresident Aliens
• Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Corporations
• Publication 519, U.S. Tax Guide for Aliens
• Publication 970, Tax Benefits for Education
• Form W-7, Application for Individual Taxpayer Identification Number
• Form 1040-NR, U.S. Nonresident Alien Income Tax Return
• Instructions for Form 1040-NR, U.S. Nonresident Alien Income Tax Return
• Instructions for Forms 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
• 1042-S, Foreign Person's U.S. Source Income Subject to Withholding
• Other forms, instructions, and publications provided by the IRS

University Policies, Standards, and Procedures

• Finance Policy 1116 – University of North Carolina at Chapel Hill Policy on General Overview of Tax Issues for Foreign National Students and Scholars
• Finance Policy 1117 – University of North Carolina at Chapel Hill Policy on Foreign National Employees
• Finance Policy 1119 – University of North Carolina at Chapel Hill Policy on Foreign National Scholarship/Fellowship Awardee
• Finance Policy 1121 – University of North Carolina at Chapel Hill Policy on Social Security Tax Withholding for Foreign Nationals
• Finance Policy 1122 – University of North Carolina at Chapel Hill Policy on Federal and State Income Tax Withholding for Foreign Nationals