Payroll Tax Compliance for F-1 and J-1 Visa Holders

Understand Tax Treaty Benefits, Year-End Forms, and Payroll Document Retention for Non-Resident Employees

Payroll taxes for non-resident aliens differ significantly from those for U.S. citizens. Many countries have tax treaties with the United States that allow non-resident aliens to claim exemptions from some or all federal tax withholdings. Depending on the type of visa held, individuals may also be exempt from FICA/Medicare taxes.

For example, F-1 visas are issued to full-time students studying at accredited U.S. colleges or universities. These students may also qualify for Optional Practical Training (OPT) in their field of study, allowing them to remain in the U.S. longer after completing their education. J-1 visas are similar but are generally used by teachers and researchers participating in designated programs.

Both F-1 and J-1 visa holders are exempt from FICA/Medicare taxes when employed for personal services in the U.S. They may also qualify for exemption from federal tax withholding if their home country has a tax treaty with the United States. Some treaties exempt all earned wages, while others impose specific dollar limits before taxes apply.

In this webinar, payroll expert Debbie Cash, CPP, will guide employers through the rules and requirements for properly handling payroll taxes for these employees. She will cover the necessary forms to claim treaty exemptions, the documentation required at year-end, and the steps to take when no tax treaty exists.

Debbie will also review payroll documents that must be retained for compliance. Some forms—often overlooked—are considered payroll records and must be kept for a specific length of time. She’ll highlight these documents and explain how long they need to be stored.
Additionally, Debbie will touch on how state requirements may differ from federal regulations and provide guidance on where to find more detailed information about your state’s rules.

Topics include:

Tax treaty benefits and exemptions based on visa types
Forms required for claiming tax exemptions and year-end reporting
Payroll document retention rules, including timesheets, wage adjustments, and tax forms
State vs. federal regulations for payroll documentation

Whether you’re new to managing payroll for non-resident aliens or just need a refresher, this session offers valuable guidance to help ensure compliance and avoid costly mistakes

Webinar Objectives

Most employers aren’t familiar with the specific laws that pertain to Non-Resident Aliens who enter the US on an F-1 or J-1 VISA. There are many different VISA types and different ones have different tax implications. These 2 specific types are exempt from required payroll taxes that all other employees are subject to having withheld. This can create issues when the wrong taxes are withheld on these employees.

More and more people are traveling abroad to study and teach in the US. Employers need to be aware to watch for different VISA types and know how to treat employees who may apply to work at their company. These workers being new in our country aren’t aware of what is required of them or what exemptions they have. They rely on the Employer to know what to do.

Tax treaties are also beneficial not only to the Employee but also to the Employer. There are specific Employer taxes that are also waived or exempt for these employees. This can be savings to the Employer as well when the correct forms are completed, and correct tax treatment of these workers is done properly.

Webinar Agenda

Basic understanding of these 2 types of VISA’s
Guidance on what taxes they are exempt from and what to withhold.
What forms should be completed by the employee and the employer.
Guidance for you as an Employer on tax treaties and treatment of these employees.
How to file forms at the end of the tax year.
Helpful websites to access the information needed for tax treaties.