IMPORTANT NEWS ON NEW IRS RULES FOR WITHHOLDING ON WAGES ON NONRESIDENT EMPLOYEES. Paula Singer has written an article explaining the new rules and how to apply them. If you would like a copy of this article, please e-mail editor@windstar.com or call 781-551-5858.

OFF-CAMPUS EMPLOYMENT

by Paula Singer, Esq. 

Under immigration rules and procedures, foreign students are authorized to work on the campus of the institution that they are authorized to attend. Foreign students may also work off-campus for education or training that conforms with applicable immigration rules or for economic hardship, provided they obtain the proper authorization before commencing the employment.

EDUCATION AND TRAINING
Foreign students may engage in off-campus employment for education or to apply the knowledge and skills gained from their educational program. Unlike on-campus employment, authorized off-campus employment may be either employment or self-employment. Off-campus employment that occurs when students’ classes are in session is generally limited to 20 hours per week. Restrictions vary with the student’s classification and the type of education or training program. (Students in English language programs are not eligible for these programs.)

Curricular Practical Training
F-1 students and F-3 border commuter students may engage in curricular practical training (CPT), which may be either on-campus or off-campus. To qualify, students must have been enrolled for at least nine months in full-time study. The employment must be required for graduation from the approved academic program or for the purpose of earning academic credits. The Designated School Official (DSO) must authorize CPT by endorsing the I-20. Canadian and Mexican students must obtain an Employment Authorization Document (EAD) from the immigration service.

Optional Practical Training
F-1 and F-3 students may engage in off-campus optional practical training (OPT) during or after completion of their studies, for a total maximum period of 12 months. M-1 and M-3 students may engage in OPT for a maximum of 6 months after completion of their studies. To qualify students must have been enrolled for at least one year in full-time study. The job must relate directly to their field of studies and be recommended by their DSO by endorsing their Form I-20. Work may commence only after they obtain an EAD.

Academic Training
J-1 students may engage in off-campus academic training during or after completion of their academic degree for a total of 18 months. The employment must be related and appropriate to the level and field of study and commence within 30 days of completion of their academic program. Postdoctoral students are eligible for 36 months of academic training. Authorization is by written approval from their Responsible Officer (RO). No EAD is required.

Employment with an International Organization
Before completion of studies, F-1 students may be employed by an international organization that qualifies under the International Organizations Immunities Act. Such organizations include the International Monetary Fund, the Organization for Economic Cooperation and Development, the United Nations, and the World Health Organization. Although there is no requirement that the job relate to students’ field of studies, hiring is typically based on a student’s field of studies. Work may commence only after an EAD is obtained.

ECONOMIC HARDSHIP
Foreign students faced with severe economic hardship beyond their control, that could not have been anticipated when they applied for admission, may be authorized to work off-campus when no on-campus employment is available. Examples of such economic hardship are:

• Loss of financial aid or on-campus employment through no fault of the student
• Substantial fluctuations in exchange rates or value of currency
• Inordinate increases in tuition and/or living costs
• Unexpected changes in the financial condition of the student’s source of support
• Medical bills or other substantial and unexpected expenses

Their DSO must recommend the employment, which may commence only after the student obtains an EAD.

The immigration service may also suspend or alter rules regarding employment eligibility under the Special Student Relief program. The Notice of Suspension issued on June 10, 1998 that applies to students whose funding comes from Indonesia, South Korea, Malaysia, Thailand, or the Philippines, details special treatment to be given to these students. On-campus employment, which may be more than 20 hours per week, requires approval by the DSO. Off-campus employment requires an EAD after recommendation by the DSO.

UNAUTHORIZED EMPLOYMENT
Employment that does not meet the definition of on-campus employment or that is not authorized off-campus employment is unauthorized. Such unauthorized employment includes an honorarium given for a lecture or presentation of a paper (unless the recipient is working pursuant to an EAD) and employment without pay for a position that is not typically filled by a volunteer. Also, students who have failed to maintain valid immigration status are not eligible for immigration benefits, including employment.

Paula Singer, Esq., Co-founder and Chairman of Windstar Technologies, Inc. and partner in the tax law firm, Vacovec, Mayotte & Singer, Newton, MA has over 25 years of experience providing advice and compliance services to individuals, their employers, and payors on cross-border employment matters.

Watch for Volume 3, Number 1 for a discussion on “Tax Treaty Benefits for Students and Business Apprentices from India.”

Q. The spouse of one of our F-1 students plans to start a company that will purchase houses, fix them up, and then sell them. I believe this activity is legal for an F-2 as long as he is not "working" for the company. However, he will obviously be receiving income. Is this a legal activity for someone in F-2 status?

A. Students without work authorization may start, own, and earn investment income from a business without violating their status as long as they provide no operational services to or for the company. The student is engaged in unauthorized employment as soon as he or she does anything for the company that a U.S. employee or contractor could do. Such unauthorized employment arises because the law is intended to prevent foreign nationals from competing for U.S. income with U.S. individuals.

Windstar Welcomes Aboard the Following New Clients:

Stevens Institute of Technology
Trudeau Institute, Inc.
West Virginia University Research Corporation
Zoological Society of San Diego

Windstar and SunGard SCT Announce New Interface between Banner HR and International Tax Navigator®

Windstar's International Tax Navigator is now fully integrated with SCT Banner HR so users can maintain control of international visitor information with ease. With this new integration, employee records created in SCT Banner can now be easily exported to Windstar’s International Tax Navigator to create base individual records. Employees will have the same identification number in both applications, allowing ease of record comparison and eliminating double entry. For more information or to download a joint presentation on the interface by Windstar and SunGard SCT, email sales@windstar.com or call 781-551-5858.

Windstar Sponsoring NACUBO’s 2006 Nonresident Alien Tax Issues Workshop

The 2006 Nonresident Alien Tax Issues workshop is scheduled for February 13-14, 2006 in Phoenix, AZ. This workshop addresses a highly complex area of tax compliance and administration, focusing exclusively on the rules governing payments to nonresident aliens.

Presentations at the APA Educational Institutions Payroll Conference

Paula Singer presented several workshops at the October APA Educational Institutions Payroll Conference, including Fundamentals of Nonresident Alien Taxation and Understanding Tax Treaty Benefits and Limitations. She also presented at the closing session with Fred Crowley, Assistant Controller, MIT, on Taxation Issues Related to Postdoctoral Trainees, Fellowships, and Foreign Persons.

Tax Analysts Publishes Paula Singer Article

The September 12, 2005 issue of Tax Analysts’ Tax Notes International published Paula Singer’s article, “Special Report, B-1 Visitors-U.S. Tax Traps for the Unwary.” If you would like a copy of the article, please email your request to editor@windstar.com.

©Copyright 2005 by Windstar Technologies, Inc. Windstar reserves all rights to this electronic material. Information contained in this publication is based on the best information available at the time of publication.  While believing the information in this publication to be accurate, Windstar accepts no legal responsibility for its accuracy.