Steps: Set Up Nonresident Alien Tax Treaty Withholding (USA)

Security: Worker Data: Payroll (Company Specific) - USA

Workday refers to tax treaty and the Internal Revenue Service Substantial Presence Test (SPT) when calculating taxes and taxable wages for 1042-S and W-2 reporting.

Tax treaties cover nonresident aliens (NRA) for these types of income:

Scholarship or fellowship grants.

Dependent personal services.

Teaching.

Studying and training.

Set up Workday to honor tax treaties between the U.S. and other countries for NRA.

Access the

Add Worker US Tax Elections

task.

Identify NRA workers by selecting the

Nonresident Alien

check box on the

Federal

tab.

Enter tax treaty information for NRA employees who receive income that's subject to tax treaty rules.

To load tax treaty information from a third-party application, use Put Payroll Worker Tax Treaty
.

Enter information for 1 worker at a time using the

Maintain Worker Tax Treaties

task.

See Maintain Tax Treaty Information for a Worker (USA).

Identify states that honor federal tax treaties.

Access the

Maintain State Tax Treaty Withholding Rules

task.

Select the

State Honors Federal Tax Treaty

check box.

Add earnings that are subject to a tax treaty to the appropriate pay component groups:

2014 and Prior	2015 and After
Income Code 16 Non Qualified [USA] Income Code 16 Qualified [USA] Income Code 18 [USA] Income Code 19 [USA]	Income Code 16 Non Qualified [Effective 2015] [USA] Income Code 16 Qualified [Effective 2015] [USA] Income Code 18 [Effective 2015] [USA] Income Code 19 [Effective 2015] [USA] Income Code 20 [Effective 2015] [USA]

Update the

Net

pay accumulation for run categories that deduct tax treaty taxes to subtract the 1042-S Withholding (Tax Treaty) Taxes [USA]
pay component group.