Set up Nonresident Alien (NRA) tax withholding for foreign employee
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- You have QuickBooks 2009 or later and you have the latest tax table version.
- The employee must qualify as an NRA.
What do I need to know about withholding for nonresident aliens (NRAs)?
How do I know if an employee should be set up to withhold taxes at the NRA rate?
What do I do when an employee enters NRA or Nonresident Alien on their W-4?
How should an NRA employee complete Form W-4?
- Not claim exemption from income tax withholding.
- Request withholding as if they are single, regardless of their actual marital status.
- Claim only one allowance (if the NRA employee resides in Canada, Mexico, or Korea, they may claim more than one allowance).
- Write "Nonresident Alien" or "NRA" above the dotted line on line 6 of Form W-4.
Are all NRAs subject to the new procedure?
How do I set up NRA withholding for a NEW or EXISTING employee?
- Update QuickBooks to the latest release.
- Download the latest payroll updates.
- Close QuickBooks and then reopen it.
In QuickBooks, choose Employees > Payroll Setup.
- Click Continue, Next or Finish until you reach the Employee Setup section of Payroll Setup.
- In the Set up your Employees window, click Continue.
- From the Employee list, select the employee's name and click Edit.
- Select Next until you reach the Enter federal tax information window.
- Select Single regardless of the employee's actual marital status to ensure proper withholding.
NOTE: If you later change this employee's marital status to Married, Married using Single Rate, or Don't Withhold, you will receive an error message in Payroll Setup. The filing status for all employees subject to NRA federal withholding must be Single.
- Enter allowances; however, Intuit recommends you set allowances to 1. Only NRAs who are residents of Canada, Mexico, or Korea may claim more than one allowance.
- Enter any extra withholding amounts.
- In the Nonresident Alien Withholding area, select Withhold as Nonresident Alien and click Next.
- Continue the Payroll Setup process by selecting Next, Continue, or Finish until you reach the Go to the Payroll Center to manage your payroll window. Select Go to the Payroll Center.
What do I do if I have an EXISTING payroll item already set up using the prior withholding calculation for NRAs?
- You must inactivate any payroll item(s) set up using the NRA withholding calculation for a paycheck (that is, a payroll item named Nonresident Alien - Biweekly).