Payments to Employees

General Tax Information U.S. Citizens & Green Card Holders

Visa Categories Non-Resident Alien vs. Resident Alien for Tax Purposes Social Security vs. Taxpayer Identification Number

Receiving Payments in the U.S.

Tax Forms from the College

Going Abroad Filing Your Tax Return Treaties, Forms & Publications Internal Procedures Contact Us

Whether you are a professor or researcher coming to the College or Institute to teach and research, a new staff member or a student working for the College / Institute, you are considered an employee.

You can generally receive a Wage and under some circumstances reimbursements for travel expenses. Below is detailed how these payments are treated tax-wise for non-resident aliens. For employee payments to U.S. citizens, green card holders and resident aliens for tax purposes, go here.

Remember, that a job offer is always followed by discussions on the right Visa status to come in on and the documentation required. Within the first three days of your start of employment you will have to fill out Form I-9 which requires visa information and documentation. See also the Middlebury College Handbook on this issue. Treaty benefits can only be given if certain restrictions are met. Please always include the Tax Office in your payroll set up.

Wage

... is processed through the Payroll Office in Middlebury / the Institute and paid via check or direct deposit;

... is taxed by the College / Institute and the tax (federal and state income tax as well as social security and medicare tax unless an excemption applies) is subtracted from the check on behalf of the IRS. The federal income tax rate is progressive and can be found in IRS Notice 1036. Generally, non-resident aliens can only claim Single with 1 exemption and are taxed at a higher rate as they do not receive the standard deduction. Depending on the last tax residence of the individual, a treaty benefit might apply dropping the tax rate to 0%. For Social Security and Medicare Tax see the separate article. State income tax rates are based on each states' tax tables. In Vermont the state income tax is roughly one quarter of the federal tax rate (see more information in the College's handbook);

... is reported by the College / Institute on Form 1042S if a treaty applies with income code 17, 18 or 19 and exemption code 04, otherwise it is reported on Form W-2. If you receive treaty benefits but also contribute to the retirement funds, or dependent care or have moving expense reimbursements or made a purchase of a Snow Bowl Pass or a Golf Course membership, or work in a state that does not allow treaty benefits for income taxes like California, etc. these items will still be reported on Form W-2 even if the actual income is shown on Form 1042-S;

... is reported by you on Form 1040NR or 1040NR-EZ.

Travel Expenses

... include, but are not limited to, visa fees, mileage, car rental, gas for car rental, toll, parking, air fare, train fare, bus fare, taxi fare, hotel, housing, hospitality, meals, site visits, special events, conference registration, office supplies, postage, photocopies, printing, binding, per diem payments for meals & incidentals and / or lodging per GSA rates (for College policies see the Handbook on Travel Expenses and the Handbook on Allowable Expenditures);

... are processed through the individual departments in Middlebury / the Institute and paid via check for reimbursements or directly to the hotel/airline etc.;

... are NOT taxed by the College / Institute as they fall under the accountable plan rules (Treasury Regulation 1.62-2). To honor the accountable plan rules the payee has to (1) establish the business purpose and connection of the expenses; (2) substantiate the expenses claimed to the payer within a reasonable period of time; and (3) return any amounts to the payer which are over and above the substantiated business expenses within a reasonable period of time. Amounts which are over and above the substantiated business expenses, or not accounted for within a reasonable period of time, are reportable to the IRS on Form 1042S or Form W-2 and subject to tax withholding like the Wage;

... are NOT reported by the College / Institute on any IRS form unless exception above;

... are NOT reported by you unless you received Form 1042S or Form W-2 with above exception on Form 1040NR or 1040NR-EZ.

Moving Expenses

... include, but are not limited to, mileage, car rental, gas for car rental, toll, parking, air fare, train fare, bus fare, taxi fare, hotel, housing, utilities for housing, hospitality, meals, site visits (for the current College policy see the handbook for new faculty or for new staff);

... are processed through the individual departments in Middlebury / the Institute and paid via check for reimbursements or directly to the hotel/airline etc.;

... are NOT taxed by the College / Institute as long as the move was made in connection with work at a new location, saitsfy a distance test, and the employe satisfies a length-of-employment test. There are some non-qualified moving expenses which are taxed by the College / Institute;

... are reported by the College / Institute on Form W-2.

... are NOT reported by you unless you received Form 1042S or Form W-2 with above exception on Form 1040NR or 1040NR-EZ.

Taxable Fringe Benefits

... include, but are not limited to, season tickets to athletic or entertainment events; gift cards or certificates redeemable at a specific restaurant, retail establishment, gas station etc.; debit gift cards (such as American Express or VISA) that may be used at any retailer accepting debit or credit cards; cash; commuting use of employer provided vehicle; commuting cost of mileage, car rental, gas for car rental, toll, parking, air fare, train fare, bus fare, taxi fare, hotel, housing, utilities for housing, hospitality, meals; membership in a country club, social club or airline club (see also the IRS' Taxable Fringe Benefit Guide and IRS Publication 535 on Business Expenses);

... are processed through the individual departments in Middlebury / the Institute and paid via check for reimbursements or directly to the hotel/airline etc.;

... are taxed by the College / Institute unless treaty benefits apply and / or a social security/medicare tax exemption applies;

... are reported by the College / Institute on Form 1042S or Form W-2;

... are reported by you on Form 1040NR or 1040NR-EZ.

Non-Taxable De Minimis Fringe Benefits

... include, but are not limited to, food and beverages provided at staff meetings or holiday parties (may exceed $50 threshold); occasional tickets to athletic or entertainment events (may exceed $50 threshold); certificate for specific merchandise from College / Institute Bookstore (such as ball cap, t-shirt, or pen set) occasionally provided under special circumstances such as recognition of birthday, holiday, special circumstances or employee excellence. An essential element of a de minimis benefit is that it is occasional or unusual in frequency. It also must not be a form of disguised compensation. Note: It is College policy not to pay for occasional birthday or holiday gifts of property such as a College / Institute t-shirt, coffee mug, etc. or flowers, fruit, books, etc. provided under special circumstances such as sickness or death in family (see also the IRS' guidance on fringe benefits);

... are processed through the individual departments in Middlebury / the Institute;

... are NOT taxed by the College / Institute;

... are NOT reported by the College / Institute on any IRS Form;

... are NOT reported by you on Form 1040NR or 1040NR-EZ.

Meals and Lodging Furnished by Employer

... include, but are not limited to, value of meals and lodging and utilities furnished to an employee, his spouse, or his dependents by or on behalf of the employer;

... are processed through the individual departments in Middlebury / the Institute;

... are NOT taxed by the College / Institute if the lodging is furnished on the business premises of the employer, the lodging is furnisehd for the convenience of the employer, and the employee is required to accept such lodging as a condition of his employment (all three conditions are met for Language Schools and Breadloaf Schools of English Faculty and Staff);

... are NOT reported by the College / Institute on any IRS Form;

... are NOT reported by you on Form 1040 or 1040EZ.

Dependent Care Expenses

... is an exclusion from income provided for up to $5,000 of child and dependent care expenses of an employee that are paid or incurred by the employer under a qualified depdnent care assistance program.;

... are processed through Human Resources in Middlebury / the Institute and are paid directly via check to you after handing in receipts;

... are NOT taxed by the College / Institute but reduce the applicable gross amount of your taxable income for federal and state income taxes;

... are reported by the College / Institute on Form W-2;

... are reported by you on Form 1040NR or 1040NR-EZ.

Lodging Furnished by Employer: Faculty Housing

... are processed through Business Services in Middlebury;

... are NOT taxed by the College / Institute if the lodging is furnished to an employee of an educational institution during the tax year and if the rent paid for such lodging equals or exceeds five percent of the value of the lodging (as determined by a qualified independent appraiser on an annualized basis). However, if the rent is inadequate, the exclusion from taxation will not apply to the extent of the lesser of the excess of five percent of the appraised value (as of the close of the calendar year in which the tax year begins) of the facility in which the lodging is provided or the average rental paid by individuals not affiliated with the educational institution during such calendar year for lodging provided by the institution that is comparable to the lodging provided to the employee over the rent paid by the employee for the calendar year. The difference is taxed as additional income for an employee;

... are NOT reported by the College / Institute on any IRS Form unless exception above and then reported on Form W-2 or Form 1042-S;

... are NOT reported by you on Form 1040 or 1040EZ unless Form W-2 or Form 1042-S have been received as noted above.

Last Updated: August 13, 2009

Receiving Payments in the U.S.

Documents and IRS Forms needed to get Paid

Social Security and Medicare Tax Exemptions

Payments to Students and Fellows

Payments to Visitors

Payments to Employees

Other Types of Payments