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MEMO: International Student Fellowship Recipients

Fellowships Office
GRADUATE DIVISION
UNIVERSITY OF CALIFORNIA
Berkeley, California 94720-5900

December 2007

TO: International Student Fellowship Recipients
FROM: Graduate Fellowships Office

The Internal Revenue Service (IRS), the U.S. government tax authority, has issued strict regulations regarding the taxation and reporting of payments made to non-United States citizens.  As a result, payments made to international students may be subject to U.S. income tax and reporting to the IRS.  The University has set up an online Tax Compliance System called GLACIER which helps managing tax liability in an efficient and effective way.

In order to comply with the U.S. tax laws, your U.S. Tax Residency Status must be determined.  The Substantial Presence Test is used to determine whether an individual is a Nonresident Alien or Resident Alien for purposes of U.S. tax withholding.  GLACIER online Tax Compliance System will calculate your U.S. Residency Status for Tax Purposes based on the information provided by you.

If you are a Nonresident Alien for Tax Purposes, you are subject to special tax withholding and reporting regulations; if you are a Resident Alien for Tax Purposes, you are taxed in the same manner as a U.S. Citizen.

As a Nonresident Alien for Tax Purposes, U.S. tax law requires that you be taxed in the following manner:

• If you receive Dependent Compensation (salary or wages), you are generally required to complete Form W-4 (http://www.irs.gov/pub/irs-pdf/fw4.pdf) as “Single” (regardless of your actual marital status) and “One” Personal Withholding Allowance (regardless of your actual number of dependents).  Certain countries may have an exception to this requirement.
• If you receive a Scholarship or Fellowship (for which NO services are required), your scholarship or fellowship may consist of Nontaxable items (Tuition, Book allowance, Required Registration Fees, and Mandatory Health Insurance) or Taxable items (including, but are not limited to, room and board, stipend, living allowance, travel payment/reimbursement).  If you are present in the U.S. under an F, J, M, or Q immigration status, the applicable rate of tax withholding is 14 percent; if you are present in the U.S. under any other immigration status, the applicable rate of tax withholding is 30 percent.
• If you receive an Honorarium, Guest Speaker Fee, Consultant Fees, Royalty, or any other type of income, the applicable rate of tax withholding is 30 percent.

The U.S. maintains income tax treaties with approximately 63 countries.  Certain taxable payments made to you may be exempt from U.S. tax based on an income tax treaty entered into between the U.S. and your country of tax residence.  The existence of a tax treaty does not automatically ensure an exemption from tax withholding; rather, you must satisfy the requirements for the exemption set forth in the tax treaty and provide all applicable forms and documents to the University.  You will also need a social security number (SSN) or an Individual Tax Identification Number (ITIN). Otherwise, the respective federal taxes will be withheld from your payments.  Depending on the total annual U.S. income you receive and your tax status, you may be eligible for a refund of some or all of the taxes withheld when you file an income tax return.

A Social Security Number may be obtained when you are offered employment. To apply for an SSN, take a copy of your contract or offer letter to Berkeley International Office, located at 2299 Piedmont Avenue, for verification of your employment eligibility. You can then submit your application to the Social Security Administration Office on 2045 Allston Way in Berkeley.  The status of receipt of your SSN application can be checked by calling 1-800-772-1213. 

An ITIN may be obtained when you receive taxable income but have not secured employment, or when you file an income tax return. An individual can apply for an ITIN at the following locations: 

• Any branch office of the Internal Revenue Service - the local office is located at 1301 Clay Street, suite 110S, Oakland CA 94612
• Any US Consulate abroad
• On campus, by appointment only:  Disbursement Office - contact Christine Chang via email: cschang@berkeley.edu.

Please follow the instructions on the ITIN application of the Internal Revenue Services (http://www.irs.gov/pub/irs-pdf/fw7.pdf).  Be sure to notify the Registrars Office in 120 Sproul Hall when you receive an SSN or ITIN. 

GLACIER will determine if you are eligible for a  tax treaty exemption and generate the appropriate forms.  Your department support staff will complete the Initial GLACIER Information Form.  You will receive a copy of the form as well as an email message from support@online-tax.net with your logon ID and password to GLACIER.  Within ten days of the receipt of the email, please log into GLACIER and provide U.C. Berkeley with your tax information in order to have the proper amount of tax withheld from payments made to you.  After completing your GLACIER tax status record, print, review, sign and date the required tax documents that GLACIER creates.  Then forward those documents along with any required attachments noted on the Tax Summary to the address indicated on the Tax Summary Report Instructions.  Please provide your Department with copies of all documents.

If you do not complete the information in GLACIER and/or submit the required forms and documents every calendar year in a timely fashion, the maximum amount of tax will be withheld from all payments made to you.  In addition, your award will not be disbursed until the proper tax forms are completed and submitted.  Therefore, please make certain you have enough funds to support yourself until fellowship payments can be made.

For current information on issues of interest to international students, visit the Berkeley International Office website at http://internationaloffice.berkeley.edu/ or call 510-642-2818.  For information on disbursements, contact Christine Chang at 510-642-3002 or cschang@berkeley.edu.  For fellowship information, contact the Fellowships Office at 510-642-0672.