"Manoj" wrote

- quote -

This is covered in IRS bulletin 2005-46, at:
http://www.irs.gov/pub/irs-irbs/irb05-46.pdf
starting on page 947 (page 7 of the PDF document). $221 is
the correct additional amount for monthly wages.

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Manoj wrote:

- quote -

Prior to 2006, NRAs were to follow specific instructions in
completing their W-4s. One of these instructions was to
include additional withholding of $7.60 per week (there was
a table that had the amount for other pay periods, such as
monthly). Many NRAs were overlooking that instruction. The
IRS changed the rules by eliminating the need for the NRA to
include the additional withholding on the W-4. Now the
employer grosses up the salary such that the amount withheld
is higher than that which would have been withheld on the
actual salary. The gross up is not an increase in pay! It
is just a formula adjustment to get to the "right"
withholding.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

My company has just sent out a memo addressed to its
employees located in the USA:

"The Internal Revenue Service (IRS) has introduced a new
procedure effective from January 1,2006, for withholding of
Federal Taxes, which employers are required to follow in
respect of Employees who are Non-Resident Alien (NRA) in
USA. Under this procedure the employer is required to add
an additional amount based on payroll period to the actual
salary paid to "NRA" for the purposes of withholding of
Federal Taxes. The additional amount to be added to the
Salary with the monthly payroll period for this purpose is
$221.00.

It may be noted that the dollar amount added as stated above
will be considered only for federal withholding and it does
not increase the Social Security, Medicare or State tax
liability. Also the amount of $221 added to the Salary is
only a notional amount for withholding purposes and does not
add to the associate's actual gross earnings reported on W2.
Only the actual Salaries earned during the year will be
reported to the IRS.

Any associate who is not a Resident per provisions of
Internal Revenue Code (IRC) would be NRA for this purpose."

Is this correct? Why the additional withholding?

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >