The following discussion generally applies only to nonresident aliens. Wages and other compensation paid to a nonresident alien for services performed as an employee are usually subject to graduated withholding at the same rates as resident aliens and U.S. citizens. Therefore, your compensation, unless it is specifically excluded from the term "wages" by law, or is exempt from tax by treaty, is subject to graduated withholding. Nonresident aliens must follow modified instructions when completing Form W-4 (PDF). Please refer to Chapter 8 of Publication 519, U.S. Tax Guide for Aliens, for directions on completing Form W-4 (PDF), Employee's Withholding Allowance Certificate.

References:

• Publication 519, U.S. Tax Guide for Aliens
• Publication 597, Information on the United States-Canada Income Tax Treaty
• Publication 515 (PDF) Withholding of Tax on Nonresident Aliens and Foreign Entities
• Form W-4 (PDF), Employees Withholding Allowance Certificate