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Payments to Non-Resident Aliens: Payroll and Employee Benefits

Prior to employment at Auburn University all Non-US Citizens are required to complete the Foreign National Tax Form. In addition, this form is required to be completed for any change in immigration status, extension of your program, or renewed immigration documents. Visit Auburn University’s Tax Compliance Foreign National Tax Forms and Instructions.

For additional information on the hiring process, please refer to the Human Resources webpage as a resource:

Tax Compliance will perform the substantial presence test to determine federal tax status based on information obtained from the AU Foreign National Tax Form. The substantial presence test is performed annually and Tax Compliance will notify the employee of any change in federal tax status for the upcoming year. In addition, Tax Compliance will determine if the employee qualifies for any exemption from tax based on exemptions available under the federal tax code or tax treaty.

Tax Withholding

FICA/Medicare Tax

Generally, an individual can be exempt from FICA/Medicare taxes under two sections of the Internal Revenue Code:

  1. 3121 (b)(19)- To qualify under this exemption an individual must be:
    • A non-resident alien for tax purposes based on the substantial presence test and
    • Present in the US in F, J, M or Q status and
    • Performing services in accordance with the primary purpose of the visa to include working legally and the individual must be the primary holder of the visa. Thus an individual in a dependent status does not qualify under this section of the code OR
  2. 3121 (b) (10)- To qualify under this exemption an individual must be:
    • In any federal tax status to include non-resident aliens, resident aliens, permanent residents or US Citizens and
    • A student who works for the school at which he/she is enrolled and is attending classes
Federal Tax

Form W-4 is the tax form completed by the employee to determine federal tax withholding from your paycheck.

A W-4, in the case of a Non-Resident Alien MUST be completed as the IRS requires:

See most current Notice 1392 at for instructions on completing the W4 if you are a non -resident alien for federal tax purposes.

Tax Treaties

Income Tax Treaties are bilateral agreements between two countries established to avoid the “double taxation” of income. A summary of Tax Treaties can be found in IRS Publication 901.

Tax treaties contain very specific language and requirements as to who may qualify for the exemption. Each income tax treaty varies in reference to the type of income earned and amount of the exemption available.

Tax Compliance, based on information obtained from the Foreign National Tax Form, will determine if the employee qualifies for an exemption from federal tax based on available tax treaty exemptions.

General requirements to claim treaty benefits:

  • You must have a US issued Social Security Number.
  • You must sign form 8233 each year that you qualify for the exemption. Tax Compliance will send these to you on an annual basis.
  • Once Tax Compliance has received the signed and dated form, the 8233 is sent to the Internal Revenue Service. The IRS is given 10 business days to review the form for validity.
  • Your treaty benefit will begin on the next available payroll.

As a withholding agent, Auburn University only facilitates the future claim of a treaty exemption on the individual’s federal tax return. If you feel you qualify for a treaty benefit and Auburn University did not grant the treaty benefit, you may claim the treaty on your individual federal tax return and allow the IRS to review and make the determination if you are exempt under the provisions of the treaty.

State of Alabama Tax

Each state is governed by their own tax laws. A non-resident in the state of Alabama has a different meaning than a non-resident alien for federal tax purposes.

The state of Alabama does NOT honor federal tax treaties.

Local Occupational Tax

Individuals working in the city limits of Auburn, AL will have a 1% tax withheld from their salary.