Federal Withholding Taxes & Tax Treaties
The University of Washington is a withholding agent for the Internal Revenue Service (IRS) and is required to withhold mandated taxes.
All employee wages are taxable unless specifically exempt from tax by a US law or a treaty.
Scholarships and fellowships paid to a Foreign National from a US source are taxable unless specifically exempt from tax by a US law or a treaty.
A tax treaty is negotiated between the United States and a foreign country. The purpose is to reduce double taxation on residents of the other country.
A list of current wage tax treaties is available in IRS Publication 901 .
Foreign Nationals should review the IRS Publications in link below and make an initial assessment of their tax treaty eligibility.
If the you are eligible for a tax treaty benefit, Glacier will generate an IRS Form 8233 Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual and an IRS Form W-4 Withholding Allowance Certificate.
IRS Form 8233 must be renewed each calendar year through Glacier.
If the ISC determines that you are eligible for a wage tax treaty exemption:
- A refund will not be made for any Federal Withholding Tax previously withheld during the current calendar year.
- Upon receipt from Glacier of a completed Form 8233 and the Treaty Attachment, Federal Withholding Tax will not be taken out of future paychecks until the tax treaty exemption dollar limit is reached.
Failure to supply the required documentation may result in incorrect taxation.
Canada Income Tax Treaty
IRS Publication 597 provides information on the income tax treaty between the United States and Canada, including provisions that often apply to US citizens or residents who may be liable for Canadian tax.
Treaty provisions are generally reciprocal; the same rules apply to both treaty countries. Therefore, a Canadian resident who receives income from the United States may refer to this publication to see if a treaty provision may affects tax they pay to the United States.
Foreign Nationals Not Eligible or Not Claiming Wage Tax Treaty
You are required to complete IRS Form W-4 Employee’s Withholding Allowance Certificate. This must be submitted in Workday. A Social Security number is required. Special rules apply to nonresident aliens for tax purposes when completing IRS Form W-4.
Withholding will default to single and one allowance if you do not complete an IRS Form W-4.
Foreign National Scholarship and Fellowship Recipients
If you are eligible for a Scholarship or Fellowship tax treaty, complete IRS Form W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals).
IRS Form W-8BEN is valid for three calendar years and must be renewed through Glacier.
A list of current Scholarship and Fellowship tax treaties is available in IRS Publication 901.
If the you are eligible for a tax treaty benefit, Glacier will generate the required forms.
Scholarship and Fellowship payments are subject to 14% Federal withholding tax if there is no tax treaty exemption.