1122 - University of North Carolina at Chapel Hill Policy on Federal and State Income Tax Withholding for Foreign Nationals



The University has created this policy as a guide for those foreign nationals who may qualify for a tax exemption under a specific tax treaty prepared between the United States and his/her country of residence.


Policy Statement

Under federal and state tax laws, nonresident aliens generally are required to file a U.S. Nonresident Income Tax Return with the IRS and a North Carolina Individual Income Tax Return with the North Carolina Department of Revenue by April 15 of the following calendar year.

Payroll Services issues a Wage and Tax Statement, Form W-2, to employees with taxable income by January 31st of each year, and Form 1042-S with nontaxable income is mailed to the individual's home address by February 28th of each year. These forms are used to complete the U.S. Nonresident Income Tax Return Form 1040 NR and the N.C. Individual Income Tax Return Form D-400.

I. Employees from Countries with Tax Treaties

In lieu of Forms W-4 and NC-4, nonresident alien employees from countries with relevant tax treaties must complete Form 8233 and an Official Attachment (provisions unique to a particular country) to claim exemption from federal and state income tax. The claim for exemption from federal income tax and North Carolina income tax must be renewed each calendar year by February 15th. Resident aliens who may qualify for a tax treaty exemption should use Form W-9 to claim the exemption.

A current listing of countries with applicable tax treaties may be obtained from the IRS. Forms for specific countries regarding Teachers/Researchers and Students may be obtained from Payroll Services. Payroll Services will assist with the treaty analysis and completion of Form 8233 in addition to Official Attachments.

Please note that some tax treaties contain a provision that imposes tax on a retroactive basis if the person works beyond the designated time period.

After earnings exceed the tax treaty maximum, withholding will begin automatically as though the student had filed Forms W-4 and NC-4 claiming single filing status with one withholding allowance. When a new calendar year begins, the foreign student will once again be eligible for the tax exemption if neither the earnings ceiling nor the time limit stipulated in the tax treaty has been exceeded.



Additional Information

Special Situations

I. Employees from Countries without Tax Treaties

The IRS imposes special requirements on the deductions and exemptions that can be claimed by nonresident alien employees whose income is not exempt under an income tax treaty. These employees will complete federal Form W-4.

The N.C. Department of Revenue follows federal tax guidelines for nonresident aliens. These employees will complete state Form NC-4.

Frequently Asked Questions


Related Requirements

External Regulations and Consequences

This policy provides general information about tax issues for foreign nationals. Although every effort has been made to provide accurate information in this policy and the related procedure, we cannot guarantee accuracy and completeness due to the complexity of the tax regulations and their capacity to change. This policy does not purport to give legal advice. For complex situations, individuals are advised to consult a tax attorney or other reputable tax advisor familiar with U.S. taxation of foreign nationals.

Please note that residency or nonresidency for tax purposes may vary from residency or nonresidency for immigration status. This policy primarily addresses tax issues. ISSS can assist foreign nationals with all questions that they might face.

University Policies, Standards, and Procedures

  • Finance Procedure 1122.1 - University of North Carolina at Chapel Hill Procedure on Determining Federal and State Income Tax Withholding of Foreign Nationals

Contact Information

Policy Contact
Subject Contact Telephone Fax E-Mail
Foreign Nationals Payroll Services 919-962-0046   payroll@unc.edu



  • October 13, 2017 - Updated main Payroll phone number.
  • September 2, 2009
  • May 29, 2007
  • January 3, 2005
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Article ID: 131402
Thu 4/8/21 9:08 PM
Thu 7/29/21 11:59 AM
Effective Date
If the date on which this document became/becomes enforceable differs from the Origination or Last Revision, this attribute reflects the date on which it is/was enforcable.
10/13/2017 12:00 AM
Issuing Officer
Name of the document Issuing Officer. This is the individual whose organizational authority covers the policy scope and who is primarily responsible for the policy.
Issuing Officer Title
Title of the person who is primarily responsible for issuing this policy.
Director of Payroll Services
Last Review
Date on which the most recent document review was completed.
10/13/2017 12:00 AM
Last Revised
Date on which the most recent changes to this document were approved.
10/13/2017 12:00 AM
Next Review
Date on which the next document review is due.
10/13/2018 12:00 AM
Date on which the original version of this document was first made official.
07/01/2004 12:00 AM
Responsible Unit
School, Department, or other organizational unit issuing this document.
Finance and Budget