International Student Federal Tax Withholding Exemption - Resident Alien Status

The substantial presence test is definitely the key factor here for your tax status. Based on your time in the US (5.5 years since 2019), you most likely do qualify as a resident alien for tax purposes. As a resident alien, you generally complete your tax forms (including withholding forms) the same way a US citizen would. This means you would no longer claim treaty benefits that apply to nonresident aliens, and you wouldn't claim an exemption based on nonresident status. For your ADP withholding, you should complete the standard W-4 information. Don't select "exempt" unless you genuinely expect to have no tax liability this year (which is unlikely for someone with a full-time co-op position). Instead, follow the instructions for the W-4 form and determine the appropriate withholding based on your expected income, filing status, and other factors. One important note: Even though you're a resident alien for federal tax purposes, you should verify if your tax treaty between the US and your home country has any provisions that still apply to resident aliens. Some treaties have benefits that continue even after you become a resident alien.

I was in this exact same situation last year! Just wanted to share my experience with taxr.ai at https://taxr.ai since it was super helpful for figuring out the transition from nonresident to resident status. I was so confused about my withholdings when I moved from student to full-time work, and my HR department was useless too. I uploaded my past tax returns and visa docs to taxr.ai, and it showed me exactly which forms to fill out and what to put on my W-4. Saved me from potentially messing up my taxes and getting hit with penalties. The system analyzed my specific situation (including the exact date I met the substantial presence test) and gave me personalized guidance. It also helped me understand which treaty benefits I needed to stop claiming and which I could still use based on my specific home country.

Just wanted to follow up - I decided to try taxr.ai after my last comment here and I'm glad I did. My situation was more complicated than I thought because I had a weird mix of scholarships, fellowship, and now co-op income spanning the transition period. The system immediately identified the exact date I crossed the threshold for the substantial presence test (which was different than what I calculated manually), and showed me how to handle withholding for both pre and post resident status periods. They even generated the exact W-4 settings I should use in ADP, which was super helpful since the new W-4 doesn't even have allowances anymore and I was totally confused. Definitely made the transition smoother than the conflicting advice I was getting from friends and campus tax help.

If you're having trouble getting straight answers from your HR department, you might want to try reaching the IRS directly using Claimyr at https://claimyr.com. When I transitioned from F-1 to OPT and had similar tax withholding questions, I needed official clarification. I spent weeks trying to call the IRS directly with no luck - always disconnected after waiting for hours. Claimyr got me through to an actual IRS representative in about 15 minutes! You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c The IRS agent was able to explain exactly how the substantial presence test applied to my specific dates of entry and what codes my employer needed to use for my withholding. They even sent me an email confirmation I could forward to my HR department. Totally worth it since my company was withholding incorrectly and I would have had a huge tax bill otherwise.

Ok I need to eat my words from my previous comment. After getting desperate with my resident alien status issues, I tried Claimyr yesterday and IT ACTUALLY WORKED. I was connected to someone in the international taxpayer division after about 25 minutes (way better than my previous attempts). The agent walked me through exactly what forms I needed to submit to my university payroll department now that I've exceeded the 5-year rule. She explained that even though I'm now a resident alien for tax purposes, there's a specific code that needs to be used for former F-1 students in their first year as residents. My previous tax mess was because my university had continued withholding as if I were still exempt from FICA when I shouldn't have been, and this created a cascading problem with my federal withholding calculations too. Now I have everything straightened out and documented.

Just to add something I learned the hard way - even if you're a resident alien for tax purposes under the substantial presence test, make sure you check if you qualify for the "closer connection exception" if you genuinely plan to return to your home country after your studies/work. I declared myself as a resident alien and filed that way, then found out I could have maintained nonresident status (which would have been more beneficial in my case due to scholarship taxation differences). Had to file an amended return which was a huge hassle. Also, don't forget that state residency rules can be different from federal! My state doesn't follow the substantial presence test and has its own criteria.

Make sure you understand exactly what "exempt" means in the ADP system! There are different kinds of exemptions and selecting wrong can get you in trouble. "Exempt from withholding" means you expect NO federal income tax liability for the entire year (very rare). "Exempt due to tax treaty" is for specific nonresident alien benefits. If you're truly a resident alien now, you usually shouldn't be selecting either exemption option - you should just fill out the W-4 with your appropriate filing status, adjustments, deductions, etc.