Nonresident Alien Routine (NERS)

The Nonresident Alien Routine (NRES) special routine is used for employees who are associated with different tax treaties requiring rules for withholding federal taxes for nonresident aliens.

The Nonresident Alien Routine setup:

Marginal tax rates are set up on the Marginal Tax Rates (DEDX) page. The Standard Deduction Amount and Minimum Standard Deduction Amount are setup on the Tax Parameters (TAXP) page. The Amount/Percent 1 field is used in this special routine to store the amount to add to the Nonresident Alien employee's wages for calculating the Income Tax Withholding for any employee W-4 form created before January 1, 2020; all other Amount/Percent fields are set to zero. The Amount/Percent 2 field is used in this special routine to store the amount to add to the Nonresident Alien employee's wages for calculating the Income Tax Withholding for any employee W-4 form created on or after January 1, 2020 or for Nonresident Alien employees hired after January 1, 2020 who have not completed a W-4 form; all other Amount/Percent fields are set to zero.

When Nonresident Alien Routine (NRES) is selected as the Special Routine ID, the related Deduction Type record on the Deduction Type (DEDT) table must have the Federal/State Marital Status field set to Federal, otherwise an error will be generated on the Deduction Plan (DPLN) page.

The NRES Special Routine is calculated as follows:

1. The employee’s pay period taxable earnings are annualized.

2. The Taxable Income is calculated as:

Taxable Income = Dollar amount from DPLN Amount/Percent 1 + annualized pay period taxable earnings OR Dollar amount from DPLN Amount/Percent 2 + annualized pay period taxable earnings.

3. The Wages Subject to Income Tax Withholding is calculated as:

Taxable Income – Income Tax Withholding Allowance Amount OR Taxable Income -Annual Exemption Amount – W4 Effective 2020+

Marginal Tax Rates (DEDX) is used to determine the tax rate schedule

4. The Annual Income Tax is calculated as:

Annual Income Tax = ((Wages Subject to Income Tax Withholding – DEDX Income Level Amount) * DEDX Tax Rate Percent) + DEDX Base Tax Amount

The tax deduction for the pay period is calculated by dividing the Annual Income Tax amount by the number of pay periods per year (for example, if an employee is paid semi-monthly, divide by 24 pay periods).