Withholding On Nonresident Aliens

3/2/2026

Foreign nationals authorized to work in the United States are classified as either residents or nonresident aliens for U.S. taxation purposes.  

The distinction between these two classifications of workers is very important.  As with U.S. citizens, resident aliens are taxed on their worldwide income.  However, nonresident aliens are taxed only on their U.S. source income. 

Salaries, wages, bonuses, or any other pay for personal services (referred to collectively as wages) paid to nonresident alien (NRA) employees are subject to graduated withholding in the same way as for U. S. cizens and residents if the wages are effectively connected with the conduct of a U.S. trade or business. 

Just like any other employee, a nonresident alien should provide a valid completed Form W-4 to their employer. However, there are special instructions that must be followed because of certain restrictions nonresident aliens face regarding their filing status, number of allowances, and inability to claim the standard deduction on their personal tax returns. 

Basically, any wages paid to a nonresident alien for personal services performed as an employee for an employer are generally exempt from the 30% withholding if the wages are subject to graduated withholding. Also exempt from the 30% withholding is pay for personal services performed as an employee for an employer if it is effectively connected with the conduct of a U.S. trade or business and is specifically exempted from wages. 

Determining Amount To Be Withheld

Employers are required to add an amount to the wages of an NRA employee solely for the purpose of calculating income tax withholding. The specific amount depends on the payroll period. This adjustment does not apply to students and business apprentices from India. The specific amount depends on the payroll period. And the year of the valid W-4 on file. 

Form W-2

The employer must also report on Form W-2 the wages subject to NRA withholding and the withheld taxes. The employer must also provide copies of this form to the employee. Wages exempt from tax under a tax treaty are reported on Form 1042-S and not on Form W-2. Wages exempt under a tax treaty may still be reported in the state and local wages boxes of Form W-2 if such wages are subject to state and local taxation. 

Nonresident Alien's Form W-4

When completing Forms W-4, an NRA is required to:

• Not claim exemption from income tax withholding
• Request withholding as if they are single, regardless of their actual marital status
• Write "Nonresident Alien" or "NRA" above the line on Form W-4

If the employer maintains an electronic Form W-4 system, they should provide a field for nonresident aliens to enter nonresident alien status in lieu of writing nonresident alien. 

Form 8233

If an NRA employee claims a tax treaty exemption from withholding, the employee must submit Form 8233, Exemption from Withholding or Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with respect to the income exempt under the treaty, instead of Form W-4. See Publication 515 for details. 

Supplemental Wage Payments

This procedure for determining the amount of income tax withholding does not apply to a supplemental wage payment if the mandatory flat rate withholding applies or if the flat rate withholding is being used to calculate income tax withholding on the supplemental wage payment. 

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