What type of payments are subject to withholding for non-resident aliens?
- Wages: KSU withholds federal and state taxes using graduated rates.
- Qualified Scholarship (Tuition, Fees and Books): No withholding.
- Non-Qualified Scholarship (Students - Room, Board, Stipends, Living Allowances, Travel, Prizes, and Awards etc.): KSU withholds federal taxes at 14%.
- Fee/Honorarium/Royalty: KSU withholds federal income taxes at 30%. There are no Georgia withholding on non-wage payments.
- Reimbursed Business Expenses for Employees/Short-Term Visitors: No withholding.
KSU must withhold taxes on all payments to non-resident aliens unless the payment is exempt under the Internal Revenue Code, a Tax Treaty, or Foreign Source Income. The Internal Revenue Code establishes the rate of withholding.
Will KSU report the income to the IRS?
All payments to non-resident aliens and resident aliens are reported to the IRS. Payments to non-resident aliens are reported on Form 1042-S or W-2. Payments to resident aliens are reported on W-2 or 1099 Form.
I would like to pay someone an honorarium to help in our area. What should I do before engaging an individual?
IRS regulations require non-resident aliens to provide documentation of valid U.S. Citizenship and Immigration Services (USCIS) status, for example, Passport, VISA, Form I-94, Form I-20 or Form DS-2019. The university must confirm that the international is eligible to receive a payment. Please contact our office at firstname.lastname@example.org for guidance and confirmation.
**Reminder** after obtaining confirmation from International Tax, please contact email@example.com and the Office of Procurement before proceeding with any agreement with an outside party.
Who is considered a foreign national?
A foreign national is an individual who is not a US citizen. The IRS distinguishes between two types of foreign nationals for federal income tax purposes: Resident alien and Non Resident alien. The taxability of payments to non-resident aliens (and some resident aliens) are subject to special rules.
We are inviting an international visitor and would like to pay them an honorarium and/or reimburse their expenses. What is required for payment?The individual’s visa type actually determines the type of payment that KSU may legally make to the individual. Honoraria payments are subject to federal withholding taxes (30%) and are reportable to the IRS. A Foreign National Information Form, Form W8BEN, Honorarium certification (if applicable), Lecture-Performance Agreement (if applicable), copies of the I-94, the I-20 or DS 2019, copies of the VISA page from the passport and a copy of their passport are required documentation for honorarium payments. Please note that improper withholding can affect your international visitor's future immigration status with the United States.
Are travel reimbursements taxable?
Nonresident aliens are eligible for reimbursement under the Accountable Plan rule. Expenses qualifying under the Accountable Plan rules are not subject to federal income tax. Qualifying expenses are not required to be reported on a Form W-2 or Form 1042-S. Qualified travel expenses include expenses incurred by the nonresident alien for hotel, meals, and transportation, the payment of which can only be made in accordance with the documentation requirements of the University's travel policies.
Can KSU make a payment on behalf of the foreign national in order to avoid taxation?Payments made by the University to a third party on a non-resident alien's behalf are considered payments to the non-resident alien. Therefore, the University must withhold the appropriate federal income tax, which depends on the type of payment, and report the payment to the IRS as if it is being made directly to the non-resident alien. However, expenses that qualify under either the Accountable Plan rules may be excluded from the nonresident alien's gross income.
Who is eligible to receive a payment/which visa type can I pay?
U. S. Citizenship and Immigration Services (USCIS) regulations are very specific about what types of payments may be made to each visa type, who may make the payments, and what type(s) of employment verification documents are required for the non-resident alien to receive payments. Our office has extensive training and contracts to determine what payments can be made.
An abbreviated list of common visa types, restrictions, and documentation is provided below:
- B-1 or VWB or WB (Visitor/Business) - May receive reimbursement for reasonable travel expenses and, under limited circumstances, payments for compensation and honoraria.
- B-2 or VWT or WT (Visitor for Pleasure) - Under limited circumstances, may receive payments for compensation, honoraria, and reimbursement of reasonable travel expenses.
- F-1 (Student) may be employed up to 20 hours on campus if full-time student with valid Form I-20.
- F-2 (Dependent of F-1) may not be employed.
- H-1B may be employed by petitioner(s) only as identified on Form I-797A.
- J-1 (Exchange Visitor - Student) may be employed on campus up to 20 hours per week with written authorization of DSO (Contact - International Student Services) and a Form DS2019. · J-1 (Exchange Visitor - Short term Scholar, Professor, Researcher or Specialist) is eligible to receive compensation and reimbursement payments from the organization and for the period stated on the DS2019. Visitor must have a Social Security or Tax ID Number for compensation payments.
- N (Trade NAFTA - for citizens of Canada & Mexico) may be employed by the sponsoring employer through whom the status was obtained. Canadians must submit only an I-94 card as employment authorization and Mexicans must submit INS Form I-797A ("Notice of Action") as employment authorization. Not a valid visa type for payments to independent contractors! Canadians who enter the United States and are not issued a Form I-94 are considered to be in B status (compensation and reasonable travel.
If you have any questions or require additional information, email firstname.lastname@example.org.