91ΧΤΕΔ

As a continuation of our series on nonresident alien (NRA) taxation, this article focuses on hiring and paying faculty and staff classified as NRAs for U.S. tax purposes. Because these employees are paid through payroll and may qualify for tax treaty benefits, coordination across campus is essential to ensure compliance.

Note: 91ΧΤΕΔ offices and personnel are unable to provide individual tax advice. Faculty and staff are encouraged to consult a qualified tax professional for personal tax guidance.

Hiring NRA Faculty and Staff: What to Know Up Front

When hiring international faculty, researchers, or staff, tax compliance begins before the first paycheck is issued. Immigration status, expected length of stay, and prior presence in the U.S. all affect how the individual will be taxed.

Employees should complete Glacier (discussed below) and submit all required documentation as early as possible. Until the Glacier review process is complete and any applicable tax treaty benefits have been approved, standard IRS withholding rules for nonresident aliens (NRAs) will apply. All employees should promptly complete the registration process, including those who may already satisfy the  and be considered U.S. tax residents.

Departments involved in hiring should work closely with:

• Human Resources
• Payroll
• International Student and Scholar Services (ISSS)
• Other university offices, as necessary

University resources such as Human Resources and International Student and Scholar Services (ISSS) assist with onboarding international employees, including required documentation and visa-related considerations.

Payroll Taxation of NRA Employees

Most NRA faculty and staff receive wages that are considered Effectively Connected Income (ECI). As a result:

• Income is taxed at graduated rates like those applicable to U.S. employees
• Withholding is required through payroll 
• NRA employees must generally complete Form W-4, although  apply to nonresident aliens

Despite these similarities, several important differences apply to NRA employees: 

• Limited Standard Deduction - In general, NRAs cannot claim the standard deduction unless a specific exception of treaty provision applies
• Additional Withholding Requirements - IRS withholding calculations for NRAs differ from those used for U.S. citizens and resident aliens. As a result, federal income tax withholding may be higher than for U.S. employees with similar compensation

FICA Tax Considerations (Social Security and Medicare)

Faculty and staff generally participate in state retirement systems instead of Social Security and typically contribute to one of the following:

• 91ΧΤΕΔ Public Employees Retirement System (typically for staff) 
• State Teachers Retirement System of 91ΧΤΕΔ (typically for faculty) 

As a result, Social Security tax is not withheld from university wages.

Medicare tax generally applies unless the employee qualifies for a specific exemption based on immigration status or tax residency classification.

Tax Treaty Benefits

The United States maintains income tax treaties with many countries that may reduce or eliminate federal income tax on certain types of compensation. Eligibility depends on the specific treaty and the nature of employment. Additional information is available in .

Tax treaty benefits are not automatic. Employees must:

• Complete a record in the Glacier Tax Compliance System 
• Provide required supporting documentation 
• Meet all treaty eligibility requirements 

All treaty claims must be reviewed and approved through Payroll Services based on the completed Glacier record and supporting documentation. Departments should not apply or interpret treaty benefits independently.

What Is Glacier Tax Compliance? 

The university uses the Glacier Tax Compliance System to support tax residency determinations and evaluate potential tax treaty eligibility. During onboarding, international faculty and staff are asked to:

• Log into Glacier 
• Enter information about immigration status and U.S. presence history 
• Upload required documentation 

Based on this information, Glacier:

• Assists in determining whether the individual is a nonresident or resident alien for tax purposes 
• Identifies potential treaty eligibility 
• Generates required tax forms and supporting documentation instructions

If Glacier identifies potential treaty eligibility, it generates instructions for required documentation and forms. This typically includes: 

• Passport identification page and expiration date
• Visa documentation
• Social Security Number (SSN)/Individual Taxpayer Identification Number (ITIN)
• Immigration status documents (e.g., I-20, DS-2019, I-797, or other employment authorization)
• Form 8233 (if claiming exemption from withholding under a tax treaty) 

Treaty benefits cannot be applied based only on anticipated eligibility or verbal confirmation, so it is important that employees complete all required steps. Glacier supports the review process, but Payroll Services is responsible for final withholding determinations and treaty implementation. 

Payroll Review and Ongoing Compliance for the Employee

After an employee completes the Glacier process, Payroll Services reviews the submission for accuracy, completeness, and compliance with IRS requirements. Approved treaty benefits are then entered into the payroll system.

Depending on the applicable treaty provision, this may result in:

• Full exemption from federal income tax withholding, or 
• Reduced federal withholding 

If documentation is incomplete or treaty eligibility cannot be established, the individual remains subject to standard NRA withholding rules without treaty benefits, which may result in higher federal tax withholding. 

Many treaty benefits are time-limited and may require annual renewal. Employees are responsible for:  

• Maintaining accurate Glacier records 
• Updating changes in immigration status, work authorization, address, or U.S. presence history 
• Providing renewed treaty documentation when required 

Delayed or incomplete information may affect payroll withholding and treaty eligibility. Using Glacier also helps the employee and the university monitor treaty expiration dates and changes affecting withholding eligibility.

Reporting Obligations

Payments to NRA employees must be reported to federal agencies using the appropriate forms. Depending on the circumstances:

• Taxable wages may be reported on Form W-2 
• Treaty-exempt wages may be reported on Form 1042-S
• In some cases, both forms may be issued

Key Compliance Considerations

Several issues can arise in the taxation of NRA faculty and staff:

• Misclassification of tax residency, particularly for individuals with multiple years of presence in the U.S.
• Delayed identification of treaty eligibility, leading to over-withholding or missed benefits 
• Incorrect FICA treatment when visa status changes 
• Delayed or incomplete documentation affecting payroll setup 

Addressing these issues requires early coordination between hiring departments and HR, Payroll, ISSS, and other university personnel or offices, as needed.

What Departments Should Do

To support compliance, departments hiring international faculty and staff should:

• Engage HR and ISSS early in the hiring process 
• Encourage employees to complete Glacier and required tax documentation promptly (before they begin working)
• Direct employees to official university resources for guidance 
• Avoid making assumptions about tax status, treaty eligibility, or expected net pay 
• Coordinate with the appropriate office when questions arise

Final Thoughts

Hiring international faculty and staff strengthens the academic mission of the university, but it also introduces complex tax compliance requirements. Understanding the basics of NRA payroll taxation and treaty administration, and using tools like Glacier, helps ensure that employees are paid correctly and that the university remains compliant with federal tax regulations. 

In the next article, we will shift focus to NRA payments through Accounts Payable, including honoraria, guest speakers, and independent contractors.