IRS Revises Withholding Rules for Nonresident Alien Employees

On Wednesday, the IRS announced the 2011 procedures for withholding on wages of nonresident alien employees who work in the United States ( Notice 2011-12 ). The new procedures apply to wages paid on or after Jan. 1, 2011.


In 2010, special withholding procedures were instituted for nonresident aliens because they were not eligible to receive the IRC § 36A making work pay credit. Because the 2010 withholding tables reflected the credit, special procedures were required to ensure that wages paid to nonresident aliens were not underwithheld.


With the expiration of the credit (it does not apply to wages paid after Dec. 31, 2010), employers can once again use the procedures explained in Notice 2005-76 and the tables in Publication 15 (Circular E), Employer’s Tax Guide, to determine the amount of tax to withhold from wages paid to nonresident alien employees performing services in the United States.


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