Professors, researchers, trainees, and other non-student individuals who are temporarily present in the United States on a J or Q non-immigrant visa are exempt from U.S. Social Security and Medicare taxes on wages paid to them for services performed within the U.S. This exemption does not apply to 1) spouses and children with J-2 or Q-3 visas, 2) work not allowed by United States Citizenship and Immigration Service (USCIS), or 3) employment that is not closely connected to the purpose for which the visa was issued. Because these individuals are considered nonresidents, only U.S. source income will be subject to income taxation. However, depending on the tax treaty between the United States and the individual’s home country, his or her wages may also be exempt from U.S. income tax for a limited period of time. Once the individual is in the United States for any part of two calendar years, he or she will generally be considered a resident alien and will be taxed on his or her worldwide income.
Here is an example: Two professors, a husband and wife, moved to the United States in July 2014 to work at a university. They were both issued Q-1 visas and planned to remain in the United States until December 2015. In 2014 and 2015, they were considered nonresident aliens, so they filed form 1040NR to report their U.S. source income, which included their university wages because there were no treaty benefits available to them. Because of their non-immigrant visa status, however, their employer was not required to withhold Social Security and Medicare taxes on those wages. If they remain in the United States long enough to be considered resident aliens, they will need to start paying Social Security and Medicare taxes. In order to retain their non-resident status, besides filing form 1040NR for 2014 and 2015, they also needed to file Form 8843 for both years.
If you know someone who will be visiting the United States as a professor, scholar, researcher, or trainee on a temporary visa type, you can suggest they make an appointment to meet with one of our International Tax Group members to ensure they understand their U.S. tax filing responsibilities.
Next week we will discuss a U.S. professor who goes overseas for sabbatical.