In Notice 2011-12, Withholding on Wages of Nonresident Alien Employees Performing Services Within the United States the Internal Revenue Service (IRS) announced that Notice 2009-91 will not apply to wages paid after December 31, 2010.
Notice 2009-91 Modified Withholding Procedures for 2010
In Notice 2009-91, Withholding on Wages of Nonresident Alien Employees Performing Services Within the United States, the IRS modified the procedures for calculating the amount of federal income tax to be withheld from wages paid to nonresident aliens starting on January 1, 2010. Since nonresident aliens were not eligible for the Making Work Pay Tax Credit, the withholding procedures were modified to reflect this difference.
Making Work Pay Credit Unavailable in 2011
Since the “Making Work Pay Credit does not apply to taxable years beginning after December 31, 2010…the withholding tables for wages paid on or after January 1, 2011 will not reflect the Making Work Pay Credit, and Notice 2009-91 will not apply in determining the withholding on nonresident aliens.”
Withholding Rules for Nonresident Aliens for 2011
According to the IRS:
For wages paid on or after January 1, 2011, employers must determine the amount of income tax to withhold from wages paid to nonresident alien employees for services performed within the United States, using the procedure explained in Notice 2005-76, 2005-2 C.B. 947, together with the tables in the revisions of Publication 15 (Circular E), Employer’s Tax Guide, and Notice 1036 that are in effect when the wages are paid. This procedure is explained in Publication 15 and Notice 1036.
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