Issues Caused by Non-Compliance of Tax Reporting for International Employees

Employee Paid as Resident of U.S. Rather Than as Non-Resident Alien

The following problems occur:

Wages are captured by the payroll system on a W-2 Form rather than Form 1042.
Federal and state taxes may be withheld in error.
OASDI and Medicare taxes may be withheld in error.

Correct This Problem With a Calendar Year

The Controller’s Office must correct tax status based on residence and treaty and request a pay group change and an earnings code change.
Data Services must change the employees pay group and earnings code.
The check or checks paid as a US resident must be reversed as reverse adjustments in the payroll system.
Pay adjustment(s) needs to be done to correct the wages and taxing status as a non-resident. This process will move the wages from W2 to 1042.
Taxes need to be refunded in the next available pay cycle.

Correct This Problem Between Calendar Years

The Controller’s Office must correct tax status based on residence and treaty and request a pay group change and an earnings code change.
Data Services must change the employees pay group and earnings code.
Current year check or checks paid as a US resident must be reversed in the payroll system.
A pay adjustment(s) needs to be done with the corrected benefit and taxing status as a non-resident. Also if any pretax 403(b) benefits were deducted they have to be moved to after tax.
Taxes need to be refunded in the next available pay cycle.
A W2c needs to be calculated & issued for the prior years incorrect wages and taxes.
A 1042Sc needs to be calculated & issued to add these wages.
The 941 quarterly tax return needs to be amended to reflect the reduction of wages and taxes for that year.
The W2 transmittal information must be amended to reflect the reduction of the wages and taxes for that year.
The 1042 transmittal information must be amended to reflect the addition of wages for that year.

Consequences for Employee

Employees pay check(s) are incorrect.
Employee is paying taxes that should not be withheld.
Employee will have to wait at least one pay cycle for a tax refund.
Employee would receive the wrong tax document (W2).
Employee would have to wait to file his or her tax return because a W2c & a 1042Sc would have to be issued.

Consequences for Emory University

IRS penalties and interest on late tax filings charges to the employee’s department.
Possible problems for Emory University with the IRS & the Social Security Administration.
Employee’s lack of confidence in Emory University.
Potential loss of productivity due to time lost while the employee tries to resolve these issues.
Emory University is matching OASDI & Medicare taxes in error.

Emory University Data Services

Hours of Operation: Monday through Friday from 8:00 a.m. to 5:00 p.m.
1599 Clifton Road, NE
Atlanta, GA 30322
(404) 727-6066
(404) 727-0227
(404) 727-7563
(404) 712-9274

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