Office of the Controller
PO Box 1510
Pembroke, NC 28372
Location: Lumbee Hall, Room 311
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, its faculty, or staff. Employee wages are not the same as payments made to a foreign visitor for independent contractor payments. Employee wages can only be paid to foreign visitors who have been granted an appropriate employment authorization and visa status by the Immigration and Naturalization Service (INS) to allow them to be compensated for services.
Assistantships at UNCP include graduate research and teaching positions. These positions involve work for compensation, and require inclusion in UNCP's payroll. To determine the status of INS work authorization, foreign students should check with the UNCP Office of International Student Services and foreign exchange visitors should check with the UNCP Office of International Programs before accepting
any such positions.
FICA is a tax that is assessed against employee wages paid to individuals who are residents for tax purposes. It is a combination of Social Security tax (currently 6.2 percent) and Medicare tax (currently
1.45 percent). This is a separate tax from the federal and state income tax and is used to fund the retirement and medical benefits paid by the Social Security Administration. FICA tax is imposed in equal parts on both the employee and employer with respect to wages paid to individuals working in the U.S. Therefore, unless otherwise exempted, one-half of this tax (7.65% of wages) is withheld from the payments to the individual, while the University pays the other one-half of this tax (also 7.65% of wages).
The DOS, operating through U. S. Consulates and Embassies outside the U. S., has the exclusive authority to issue visas. Visas do not guarantee admission to the U. S., but only allow one to present himself/herself to the INS for physical entry to the U. S. Entry will be granted if INS finds that the person's intent conforms to the visa, i. e., a person with a tourist visa is not actually intending to go to school or work.
The INS, a part of the Department of Justice, is the U. S. Government agency responsible for admitting foreign nationals into the U. S. Upon admission, which usually happens after presenting a visa issued by the DOS, INS issues foreign nationals status in the nonimmigrant category in which they seek entry and for which they qualify.
Independent contractor payments are for services performed by foreign visitors which may be outside the scope of employment. Independent contractors are not the same as employees. Services that are treated as independent contractor payments must have all of the following
Independent contractor payments can only be received by foreign visitors whose status allows the receipt of such payments as a matter of law. If the independent contractor is known to be a foreign national, special care should be taken to make certain that the individual is truly an independent contractor. No other review needs to be made by the U. S.; the responsibility to accept and report independent contractor payments rests solely on the contractee.
The IRS is the U. S. Government agency that collects taxes. To make this process easier, the IRS issues various forms (withholding allowance certificates, income tax returns, etc.) which are used to help foreign visitors pay the taxes that apply to them. The IRS is also the part of the U. S. Government that determines how much you owe in taxes, and whether an organization that pays income to a foreign visitor is required to withhold specific amounts from that income.
An immigrant, or resident alien for immigration purposes, is a "green card" holder and is often referred to as a Permanent Resident (PR), the term which we will use in this guide. A PR is a non-U. S. citizen who has been authorized to live and work in the U. S. indefinitely. It is also a status which one must hold before being eligible to apply for U.S. Citizenship.
A nonimmigrant, or nonresident for immigration purposes, is a person who is not a citizen or a PR of the U. S. and has been admitted to the U.S under one of the nonimmigrant categories for a temporary stay that will end when the purpose of that stay has been met.
A nonresident for tax purposes is a person who is not a U. S. citizen and who does not meet either the "green card" test (See Page 10) or the "substantial presence" test (See Page 12) described in Publication 519, U. S. Tax Guide for Aliens.
A resident for tax purposes is a person who is not a U. S. citizen and who meets either the "green card" test or the "substantial presence" test described in Publication 519, U. S. Tax Guide for Aliens.
Any money paid to a foreign visitor or paid to a third party on their behalf on which taxes are required to be paid to the U. S. Government is called taxable income. Employee wages and stipend payments are considered taxable income. State and federal income tax will be withheld by UNCP from these payments at the appropriate rate.
Travel payments can be made to foreign visitors in payment for, or reimbursement of, a number of travel-related expenses including the cost of meals, lodging, and transportation costs such as air fare and automobile rental, and other related expenses incurred while in transit. There is no distinction between amounts paid directly to travel service providers, such as airlines, and payments made directly to the foreign visitor.
Withholding means that the taxes a foreign visitor is obligated to pay to the U. S. Government will be taken out of the paycheck or stipend check by UNCP, then sent to the U. S. Government, as required by law.
Updated: Friday, September 24, 2010
© The University of North Carolina at Pembroke
PO Box 1510 Pembroke, NC 28372-1510 • 910.521.6000