Treatment of Nonresident Aliens

Treatment of Nonresident Aliens

Established July 2020

This is a material issue for East Lansing because we have a very large number of international students living within East Lansing who are not considered residents of the U.S.

This is our policy for treatment of their income:

If they file a Non-Resident Federal Tax return (NR-1040), we consider them non-residents of East Lansing using the logic that if they are not a resident of the U.S., how can they be a resident of East Lansing.

For many Countries, there is a treaty which allows the individual to earn some money (generally $5,000) before they need to pay Federal taxes. They can also reduce their income by this amount. If they earned $25,000, they would report $20,000 on their Federal return.

Since the Federal wages is the starting point for any City return, we are allowing them to report the wages after the adjustment for the Treaty.