All posts in Sprintax Calculus

  • Nonresident alien tax withholding – a comprehensive guide for US employers

    NRA withholding

    The proper withholding of nonresident alien (NRA) tax is a complex challenge that any US employer hiring staff from overseas must overcome.

    As an employer in the US, before you begin the process of hiring nonresident alien (NRA) employees, you should know that there are a number or rules which must be followed in order to properly withhold tax from an NRA.

    With that in mind, the Sprintax team have put together this guide which discusses some of the key factors that any employer should consider  when hiring nonresident alien employees!

    First things first! How can you work out if your employees are residents or nonresidents for tax?
    And how is tax residency determined?

    In order for an individual to be deemed a resident alien for tax purposes they need to meet either the Substantial Presence Test or the Green Card Test for the calendar year.


    The Green Card Test

    If the nonresident is legally residing permanently in the US, they will be considered a lawful resident of the US. In order to secure this status, the US Citizenship and Immigration Services will need to issue them an alien registration card, Form I-551, also known as the Green Card.


    The Substantial Presence Test

    This test identifies whether a foreign worker is a resident or nonresident alien for tax purposes.

    To meet the Substantial Presence Test, an individual must be be physically present in the US on at least:

    • 31 days throughout the current year, and
    • 183 days throughout the 3-year period which encompasses both the current year and the 2 years immediately before that, including:
      • All the days you were in the US during the current year, and
      • 1/3 of the days you were present in the first year before the current year, and
      • 1/6 of the days you were present in the second year before the current year

    If an individual doesn’t not pass this text they will be considered a nonresident for tax purposes.

    Nonresident alien tax withholding

    How do I know if my organization is a withholding agent?

    The IRS defines a ‘withholding agent’ as any individual or organization that pays income to a foreign person which is subject to tax withholding.

    This can include any entity such as individuals, corporations, trusts, associations, or anyone who is acting as agents or intermediaries.

    Therefore, the majority of organizations in the US who employ nonresidents will be considered withholding agents.


    How does nonresident tax withholding work in the US?

    Most nonresident aliens are subject to different tax withholding rules than resident alien employees.

    For instance, nonresident aliens are taxed only on their US source income and their exact rate of tax withholding will depend on their personal circumstances.

    For example, the nonresident may be entitled to avail of tax treaty benefits which enable them to pay tax at the reduced rate.

    What’s more, it’s important to be aware that nonresidents typically do not qualify for the same tax credits that resident aliens do.


    What percentage of tax is withheld on nonresident aliens?

    While there is no one rule for all nonresidents, as each case can differ, most US-sourced income earned by a nonresident is subject to a tax withholding rate at 30% (called “NRA withholding”).

    However, as mentioned above, a reduced rate or even exemption may apply to some nonresident aliens, if an Internal Revenue Code Section provides for a lower rate, or if there is a tax treaty between the nonresident’s home country and the US.

    Usually, a graduated rate of tax is already withheld from any payment made to the NRA.


    What income is subject to NRA withholding

    There are three important pillars that can be used in order to properly determine the correct payment and tax withholding requirements of a nonresident worker.

    Knowing the answers to these three questions can allow you will be able to properly determine how any individual should be treated from a tax and payroll perspective:

    1. Is the individual a US resident or nonresident for tax purposes?
    2. Knowing the type of income is the individual receiving – for example, is it employment, scholarship or royalties?
    3. Is the income US-sourced or foreign-sourced?

    As previously mentioned, as an employer, you are classed as a withholding agent, and therefore should be withholding tax at a rate of up to 30% on the nonresident.

    Chapter 3 of IRC

    Chapter 3 of the Internal Revenue Code (IRC) pertains to the withholding of income taxes from wages paid to employees by employers.

    Under Chapter 3 of the IRC, employers are required to withhold income taxes from their employees’ wages based on the information provided by the employee on Form W-4. What actually determines the amount is based on a variety of factors, such as the employee’s filing status, number of allowances claimed, and other factors that affect their tax liability.

    NRA withholding on foreign employees

    Should Social Security and Medicare (FICA) be withheld from nonresident alien employee salary?

    Again, that depends!

    In general, nonresident employees are exempt from paying Social Security and Medicare taxes for the first five years of their employment in the US.

    However, there can be exceptions to this rule, such as for employees on certain visa categories or if they are residents of certain countries.

    FICA exemption does not apply to:

    • Spouses and children on F-2, J-2, M-2, or Q-3 nonimmigrant status
    • Nonresidents who are in employment which is not allowed by USCIS or in employment which isn’t linked to the reason their visa was issued
    • Nonresident aliens present in the US on F-1, J-1, M-1, or Q-1/Q-2 visas who then change to an immigration status which is not exempt or to a special protected status
    • Nonresident aliens in the US on F-1, J-1, M-1, or Q-1/Q-2 visas who become resident aliens
    • If the exemption period has passed – this is 2 years for J and Q visas and 5 years for F and M students

    The employment that the nonresident alien is performing should be closely connected to the purpose for which the visa was granted.

    Once the employee becomes a resident alien by IRS rules, they will need to start paying taxes.

    VisaFICA exemption
    F-1Exempt for 5 years following date of entry; after they may be exempt based on student enrollment.
    J-1 StudentExempt for 5 years following date of entry; after they may be exempt based on student enrollment.
    J-1 Scholars & ResearchersExempt for either 2 of their first calendar years in the US, or 2 out of the first 6 calendar years in the US.
    H-1B and O-1Will pay FICA tax
    J-2 and H-2Will pay FICA tax


    Does the recipient have to provide an SSN or ITIN in order to be paid?

    As you are the withholding agent for the nonresident, you must generally request that the payee provide you with their SSN (Social Security Number) or ITIN (individual taxpayer identification number).

    A SSN is required when the worker is expected to perform dependent personal services. In this case ITIN is not acceptable.

    However, the ITIN is acceptable if the income is passive (dividends, rents, etc) or when the person is paid scholarship or grants.


    What states have nonresident tax withholding?

    Nonresidents are liable to play state tax, depending on the state they are living in.

    That’s because only 41 of the US states tax workers at a state level, with some minor exceptions to the rule.

    Essentially, factors deciding state income tax withholding for nonresidents differ by state, with different rules in each one.

    Those that don’t charge state tax on income are:

    • Alaska
    • Florida
    • Nevada
    • New Hampshire (taxes investment income but not earned income)
    • South Dakota
    • Tennessee (taxes investment income but not earned income)
    • Texas
    • Washington
    • Wyoming


    How can help me with NRA tax withholding?

    Sprintax Calculus is a NRA tax software that has been specifically designed in order to ensure that organizations and their nonresident alien employees are compliant with IRS rules and laws come tax time.

    Our easy-to-use software allows you to manage the tax profiles of your nonresident population easily in one place – in the process making life a lot easier for your payroll office staff.

    With Sprintax Calculus, you can also  instantly generate key tax forms such as 1042-S, W-4, W-8BEN and more.


    Want to learn more?

    Why not register for a FREE demonstration of our software?

    Simply complete the short form here to talk to one of our team members today!

    Similarly, Sprintax Returns is the go-to federal tax e-filing and state tax return preparation site for nonresident aliens in the US.

    When your nonresident employee sets up a Sprintax Returns account, they will ensure they are fully tax compliant with Internal Revenue Service (IRS) rules.

    Better yet – nonresident aliens will receive their maximum legal US tax refund if they are due one.




  • We’ve made some improvements to Sprintax Calculus. Here’s what you need to know

    Sprintax Calculus ADA Compliance, UX improvements and improved usability 2022

    We’ve made some improvements to Sprintax Calculus. Here’s what you need to know

    ✔ Enhanced user experience

    ✔ Improved usability

    ✔ Full ADA compliance


    At Sprintax Calculus, we’re on a mission to make life easier for all of our users.

    And today we’re delighted to take a big step towards achieving this goal.

    We’re super excited to launch (beta for now!) a number of new improvements to our Calculus platform. The headline development is our enhanced ADA compliance. Continue reading “We’ve made some improvements to Sprintax Calculus. Here’s what you need to know” »

  • Explainer: What each Sprintax Product will do for you

    What do Sprintax products do

    It has been nearly one year since Sprintax underwent brand updates to ensure we were delivering the very best possible product for our customers.

    Our goal is to assist employers and nonresidents alike in the US with preparing their taxes, ensuring they are 100% tax compliant.

    Each brand offers a simple and easy-to-use product that couples peace of mind with tax compliance – often a rarity in the US!

    So, what is each Sprintax product, and what will it do for you?

    Find out below!

    Continue reading “Explainer: What each Sprintax Product will do for you” »

  • Five top takeaways from the Nonresident Tax Clinic

    At the recent Nonresident Tax Clinic, our panel of industry thought leaders explored the world of tax compliance and outlined the latest developments in rules and regulations for taxation of nonresidents in the US.

    This fascinating event was ideal for anyone working within a HR, payroll department, or international office and who is interested in learning more about nonresident tax compliance.

    If you missed the Nonresident Tax Clinic and would like to check it out, you can watch it back here. Continue reading “Five top takeaways from the Nonresident Tax Clinic” »

  • Line-up announced for the Sprintax Nonresident Tax Clinic 2022

    The Sprintax Nonresident tax clinic 2022
    • The Nonresident Tax Clinic takes place on Wednesday 17 August
    • This free-to-attend session will be a complete tax guide to hiring and paying foreign nationals
    • Practical advice for payroll department & international office staff
    • Fantastic panel of speakers confirmed

    Register here to save your seat Continue reading “Line-up announced for the Sprintax Nonresident Tax Clinic 2022” »

  • New year, New Look – Re-Introducing Sprintax!

    Launching the Sprintax rebranded website

    Making the complex simple for nonresidents and their employers in the US

    Team Sprintax are delighted to unveil our new look. We’re excited to share our brand updates with you and a little background on why we made them.

    Sprintax first launched in 2014 as a nonresident tax advisory for US universities. Today we work with over 500 organizations across the US delivering tax education and tax filing services to international students and scholars – and their employers. Given our expanded product, team and ambition, we felt the time was right to update our branding too.

    At the heart of our rebranding is the goal to seamlessly transition all of our nonresident services under one roof, bringing together our products and technologies under one name, Sprintax.

    Sprintax for individuals

    Here at Sprintax, we understand the unique challenge of moving to a new country as an international student, intern, au pair or graduate. In fact, most of our team have worked or studied abroad at one stage or another! Navigating a new country, school or workplace can be difficult, not least when it comes to taxes. That’s why we’ve made it our mission to make the complex simple, so you can focus on the important things like finding a great apartment or the nearest coffee place.

    Our software is designed to support US nonresidents on every step of their journey, from preparing their pre-employment payroll forms (Sprintax Forms), to filing their first US tax return (Sprintax Returns).

    Sprintax has rebranded. Introducing Sprintax Returns and Sprintax Forms

    Sprintax for business

    At Sprintax, we don’t just support students and interns. We are passionate about our schools and during the tax season you’ll mostly likely find us on the road, delivering on-campus tax clinics or sitting in on a NAFSA panel session. You can learn more about our partner program here.

    If you are an employer or institution with international employees, we can help ensure you tax them correctly and that your organization remains tax complaint with the IRS.

    If your payroll department are dealing with international employees, then they’ll be all too familiar with the world of international tax treaties. Ever changing, it can prove a time-consuming and daunting task to determine the eligibility status of each international employee.

    Enter Sprintax Calculus, our multi-jurisdiction, tax compliance software, built to simplify payroll processing for nonresident employees and international vendors. The software will automatically determine the tax withholdings for your nonresident population, generate aggregated reports and integrate with your payroll platform for a smooth transition of data. Nifty huh?!

    TLDR; so what’s new with Sprintax?

    For our current users, you’ll notice some big changes on the website! It’s now much easier to navigate between our services. We’re also working on our new and improved help site and resource centre which will go live over the coming weeks.

    As part of our rebrand, we have introduced a new naming convention for each of our services. Here’s a quick recap!

    Personal services

    Sprintax Returns (Formerly, Sprintax Tax Prep)

    Sprintax Returns is the new name for our nonresident federal tax e-filing and state tax return preparation solution. Start here to determine tax residency status and to prepare and file US nonresident federal and state tax returns.

    Sprintax Forms (Formerly, SprintaxTDS Personal)

    As a nonresident student, scholar or employee in the US, you may be eligible for specific tax treaties. When you start working and earning an income in the US, Sprintax Forms will help ensure that you pay the right amount of tax on your salary – assisting with pre-employment paperwork including form W-4, W-8BEN and more.

    Business services

    Sprintax Returns Partners (Formerly Sprintax Tax Prep Partners)

    We partner with schools and institutions across the US to deliver nonresident tax education and tax return filing services to their international population. To find out more about partnering with us on Sprintax Returns, schedule a call.

    Sprintax Calculus (Formerly, SprintaxTDS)

    The documenting and reporting on payments made to nonresident employees has become a significant challenge for many US-based organisations. Sprintax Calculus (Formerly SprintaxTDS) helps payroll offices to manage the tax profiles of their nonresident employees on a single, user-friendly dashboard. Find out more here.

    Note: If you are a Sprintax Calculus partner, your student users will be asked to login and create their profile under the individual dashboard, Sprintax Forms.

    Sprintax has rebranded. Introducing Sprintax Calculus

    A word from our Vice President

    “Sprintax is going from strength-to-strength. The product we launched in 2014 is very different to who we are today, so it was time for a refresh. However, while the look and feel are more modern, it’s still the same goal that drive us – the ambition to make the complex simple. We hope you and your clients like what we’ve done – as always we’re keen on your feedback!”

    Enda Kelleher
    Sprintax Vice President

    More to come…

    Our new website is the first of many exciting developments at Sprintax. Over the next few months, you’ll notice more improvements to our software which we hope will further enhance your user experience, making Sprintax an intuitive and helpful tool to use, no matter what your use case!

    We want to hear from you!

    It would not have been possible for Sprintax to have grown over the last few years without the incredible support of our clients and partners. We are incredibly grateful for this support and, with that in mind, we would love to know what you think of our new site and any recommendations you may have for our next phase of development.

    Be sure to email your feedback to or tag us on social!