Special income withholding draft instructions for nonresident aliens were released Jan. 13 by the Internal Revenue Service.
A draft of Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens, said that nonresident aliens must follow special instructions when completing the Form W-4, Employee’s Withholding Certificate, which was updated for use starting in 2020. The notice, last issued in October 2018, retains some previous guidance, such as filing responsibilities and differences in withholding.
The two-page notice modifies the instructions for Form W-4 to take into account restrictions on filing status and claiming the standard deduction, other deductions, and tax credits for some nonresident aliens. The benefits of the standard deduction are included in the existing wage withholding tables published in Publication 15-T, Federal Income Tax Withholding Methods, the notice said.
Nonresident aliens were advised to pay close attention to several sections of the 2020 Form W-4: Steps 1(b) and 1(c), regarding personal information that includes a Social Security number and the individual taxpayer identification number; Step 2, Multiple Jobs or Spouse Works; Step 3, Claim Dependents; and Step 4, which deals with other adjustments.
In some cases, nonresident aliens may be exempt from federal income tax withholding, the notice said. Exemptions to withholding may apply when compensation paid to employees of foreign employers does not exceed $3,000 and the employee is temporarily in the U.S. for not more than 90 days in a year. Nonresident aliens should refer to Publication 519, U.S. Tax Guide for Aliens, for information on qualifying for a withholding exemption. The last version of the publication was for use in 2018; an updated version has not been released.
Form W-4 and the accompanying instructions were revised to reflect the elimination of personal exemptions in the tax code overhaul (Pub. L. 115-97) that took effect Jan. 1, 2018.
Draft publications are not final and may be updated.