FOREIGN VISITOR HONORARIUMS OR OTHER PAYMENTS
Utah State University (USU) must comply with Internal Revenue Service Regulations in connection with withholding and reporting of tax on nonresident aliens. The reporting and taxation requirements of nonresident aliens are very complex. These guidelines will help individuals and departments meet their reporting and taxation requirements.
Before any arrangements are made with the foreign visitor or company, contact the Controller's Office at 797-1045 to discuss the immigration and payment requirements. If the foreign visitor is brought to USU for longer than nine days, the Office of International Students and Scholars (OISS) needs to be contacted at 797-1124. Because of the complicated tax laws and regulations for these payments, we strongly request that you review these procedures and contact the Controller's Office well in advance of making a payment request. Having the correct documentation will make the process much easier and faster.
Payments made to or on behalf of a nonresident alien may be reported to the Internal Revenue Service (IRS). In addition, all payments are subject to federal income tax withholding unless they are specifically exempted by either U.S. tax law or by an income tax treaty. (Note: there are tax treaties with over 60 countries, each of which is unique, different, and can change frequently.)
USU departments need to ask the following questions before services are performed:
- May the University accept services from a foreign visitor?
- May the University pay a foreign visitor?
- Should taxes be withheld from a foreign visitor's payment?
- When a grant involves paying a foreign visitor the Sponsored Programs Office should be contacted at the time of proposal (797-1226).
The following provides information on immigration requirements and taxation of a foreign visitor when paying an honorarium, stipends/fellowships, other payments, or travel reimbursement.
- Examples of payments made to nonresident aliens include, but are not limited to:
Honoraria, stipends/fellowships, travel reimbursements, and other payments to a foreign visitor need to be in compliance with current immigration status requirements and with certain tax regulations.
- Stipends /Fellowships
- Travel & Expense Reimbursements
- Scholarships (Note: Payments do not have to be paid in cash; credits to a student's account are included under these requirements.)
- Independent Contractor Payments
- Honoraria/ Prizes/Awards
Any payment being made to a nonresident alien requires special attention and handling. Below is a summary of the requirements for paying a nonresident alien. In order to receive a tax treaty benefit the individual must have a social security number (SSN) or a US Tax Identification Number (TIN). Payments being made for a scholarship (tuition, books, and fees) do not require a SSN or TIN.
|PAYMENT TYPE||NO TAX WITHHELD||TAXES WITHHELD||FORMS NEEDED||TAX FORM ISSUED TO INDIVIDUAL||EXAMPLES||TAX STATUS|
(Employment status based on VISA type)
|Recipient's country of origin has a current tax treaty with the U.S. government (Documentation of residency, VISA/Immigration status & eligibility of employment is required).||Recipient's country of origin does not have a current tax treaty with the U.S. government.||I-9, W-4 if wages are not exempt under a tax treaty, Form 8233 if wages are exempt under a tax treaty, and SSN||1042-S if all or some exempt tax treaty; W-2 if taxable or partially taxable (often both forms are required)||Graduated Federal withholding rates if wages are taxable.|
|STIPENDS/ FELLOWSHIPS (NON-QUALIFIED SCHOLARSHIPS)
|Recipient's country of origin has a current tax treaty with the U.S. government (USU department required to provide documentation of recipient's residency and VISA/Immigration status).||Recipient's country of origin does not have a current tax treaty with the U.S. government.||W-8BEN and SSN or ITIN||1042-S||Room and board for scholar athletes.
Stipends for living expenses including meals, lodging, and other personal items. Medical insurance premiums paid to insurance companies.
|14% if not exempt under a tax treaty.|
|SCHOLARSHIPS (QUALIFIED)||According to IRC Section 117 taxes are no longer withheld.||Tuition, fees, books, and course-related materials.|
|TRAVEL & EXPENSE REIMBURSEMENTS
||USU department has followed the current USU Travel Policy.
||USU department is unable to follow the current USU Travel Policy.||TA & TR in the Travel & Expense System||1042-S if the USU Travel Policy is not followed.||Visiting Professor for seminar or lecture.||Not taxable if the USU Travel Policy is followed.|
|Recipient's country of origin has a current tax treaty with the US government (USU department required to provide documentation of recipient's residency and VISA/Immigration status)
||Recipient's country of origin does not have a current tax treaty with the US government||W-8BEN, Form 8233 if exempt under tax treaty; copy of I-94 and passport, and SSN or ITIN||1042-S||Technical or Specialty Services for a project. Foreign Speaker.||30% if taxable.
||Recipient's country of origin has a current tax treaty with the US government (USU department required to provide documentation of recipient's residency and VISA/Immigration status)
||Recipient's country of origin does not have a current tax treaty with the US government||W-8BEN and SSN or ITIN||1042-S||Royalty payments on a patent.||30% if taxable.|
- A Form W-8BEN should accompany the check request.
- If a nonresident alien is exempt from federal income tax withholding because of either U.S. tax law or a tax treaty, the department needs to send the appropriate form with the check request:
- Form 8233 - Compensation (independent contractors and employees) and related payments.
- Form W-8BEN Part II- Scholarship, fellowship (no service), royalties and other payments.
- Resources in the Controller's Office are available to complete these forms. Contact the Controller's Office at 797-1045.
Note: Please send the signed and completed Foreign Honorarium/Other Payment Check Request Form along with documentation to Payroll (UMC 2400).
(Click on the line below to link to form)