Payroll, Taxes & Social Security
Paying Your International Staff Members
International students must pay taxes and obtain a Social Security Number. It’s very important that you understand what you need to do regarding withholding, earnings statements, and wage reporting.
Much of what you need to do is business-as-usual for you, but there are a few differences you’ll need to keep in mind.
Social Security Numbers
Every student must obtain a Social Security Number (SSN) by visiting the local Social Security office with paperwork in hand. You can help them find the local office, and offer transportation if needed.
It takes several weeks for SSNs to be issued but it is legal for students to work and be paid, before they receive an SSN, as long as they have applied for a number.
For more information, read the legal opinion letter written by CIEE attorneys.
Payroll & Taxes
Every CIEE Work & Travel USA student must pay federal, state and local income tax. Students do not pay Social Security tax, Medicare, or federal unemployment tax.
Many students can benefit from assistance filing tax returns. CIEE recommends taxback.com, a tax preparation service that serves many J-1 exchange visitors.
The W-4
One of the first things your student will need to do is fill out a W-4, just like any new hire. However, the instructions are a bit different. Here’s how to guide them:
Do not use the Personal Allowances Worksheet at the top of the W-4. This is for U.S. residents only.
Check only “Single” marital status on line 3, regardless of actual marital status.
Claim only one withholding allowance (enter “1” on line 5).
Write “Nonresident Alien” or “NRA” above the dotted line on line 6 of Form W-4.
J-1 Visitors cannot claim “Exempt” withholding status on line 7.
The W-2
You will need to send a W-2 statement to your student at the end of the tax year. If the job spans two tax years, you will need to send a second W-2 many months after the student has returned home.
Confirm your student’s home address and email address before he or she leaves. Contact CIEE for assistance if you need to verify the address – we have it on file.
If you use an online system to distribute W-2s, confirm that the student has login information.
Tax Withholding
There are special procedures for students. You must add a certain amount to their wages before calculating the correct withholding amount of federal tax only. The calculated tax is then withheld from their original pay.
How much to add depends on your payroll frequency. The amount may have changed, so check Publication 15, Circular E for the latest information:
Weekly: Add $42.30
Bi-weekly: Add $84.60
Semi-monthly: Add $91.70
Monthly: Add $183.30
EXAMPLE:
A student makes $500 and is paid weekly.
Add $42.30 and use the tax table to figure withholding on $542.30. For example, $56.
Gross pay: $500. Federal withholding: $56. Net pay: $444
This applies to the wage-bracket method of withholding. If you use the percentage method, consult the IRS or a tax professional.
Avoid Common Mistakes
If you have been withholding FICA/FUTA from your student’s pay, you will need to change withholdings for future paychecks and issue a refund. You can claim a refund of incorrectly paid FICA/FUTA from the IRS when filing your employer’s federal tax return (see the instructions for IRS forms 941 and/or 944 for more information).
Social Security FAQ
Students should apply for their SSN no more than ten days after starting work. They must show you proof of application.
Any of the following is acceptable:
You must collect the following information:
Once your students receive their SSNs and share them with you, update your payroll records.
The IRS provides W2/W3 filing instructions to employers who do not know their employee’s SSN. If you must have the number, you can make a formal request to the Social Security Administration on company letterhead, stating that the number is needed for wage reporting purposes. The request must include your contact details, the student’s full name, gender, and date of birth, and proof that the individual worked for you. Requests should be taken to the closest SSA field office whenever possible but requests can be mailed. If a request is mailed, it is a good idea to follow-up by phone two weeks later.
If you receive the SSN after filing your wage reports to the IRS, file a form W-2c (Corrected Wage and Tax Statement). Visit www.ssa.gov for instructions.
If the student files an application late, causing reasonable doubt that they will receive it prior to returning home, he or she should file a form SS-7028 along with the application. This form is used to authorize SSA to disclose the number directly to their employer. SSA requests that this form only be used if the number is not likely to be issued before the end of the student’s program.
If you can’t mail the card directly to your student, mail it to CIEE and we will forward it. If you have been assigned an International Recruitment Consultant, you can send it to them. Otherwise, please send it to our Customer Service Center at: CIEE Customer Service, 600 Southborough Drive, Suite 104, South Portland, Maine 04106.