Leta Collie, CPA
Manager, Technical Tax Services
As the summer months approach, you may be thinking about seasonal hiring for your business, and students are beginning to think about how they will fill their summer days. Foreign students spending the summer in the United States are a large pool of potential summer employees.
Student and cultural exchange visitors come to the United States to study on F-1, J-1, M-1 or Q-1 visas.
The most common student visa is the F-1 visa, which is for students attending a university, high school or language training program. Most of these F-1 students are prohibited from working off-campus during their first school year, but in the summer they may receive employment authorization from U.S. Citizenship and Immigration Services through their designated school official. Additionally, F-1 visa students will have work authorization if they are engaging in Optional Practical Training (OPT) or Curricular Practical Training (CPT).
Another common visa category for students is the M-1 visa. These foreign full-time vocational students have attended community college, junior college or vocational programs. They may be employed off-campus in Optional Practical Training (OPT) after completion of their studies.
International cultural exchange workers will have either J-1 or Q-1 visas, and will work for sponsoring employers. The State Department’s J-1 Summer Work Travel Program allows foreign college students to spend a summer working and traveling in the United States as part of a cultural exchange. Non-student cultural exchange visitors will have a Q-1 visa, allowing them to gain fifteen months of practical training and employment in the United States.
Because of the temporary nature of the F-1, J-1, M-1 or Q-1 visa-holder’s visit to the United States, these students and cultural exchange visitors are typically nonresident aliens for tax purposes. Below is a chart that summarizes the general rules for withholding obligations on a foreign student or exchange visitor employee.
|Visa Type||Federal Income Tax Withholding?||Liable for Social Security / Medicare?||FUTA Obligation?||State Income Tax Withholding?||SUTA Obligation?|
|Yes, unless a treaty exemption applies & student provides an IRS Form 8233||No, if the student is a Nonresident Alien||No, if the student is a Nonresident Alien.||Yes, unless the state respects treaties, a treaty exemption applies, and a Form 8233 is furnished||Depends on state law|
There are several differences in an employer’s withholding obligations for nonresident alien students and exchange visitors, which will be discussed in an article next week.