Tax Considerations for Payments to NRA/Foreign Nationals
Payments made to nonresident aliens are subject to a different set of federal tax laws than are payments made to U.S. citizens or resident aliens. San Diego State University (SDSU) is required to comply with these laws as a withholding agent when making payments to or on behalf of nonresident aliens.
To maintain compliance with these tax laws, Tax staff must review all payments to those who are not U.S. citizens or permanent resident aliens (i.e. green card holders) and determine whether a foreign national is a resident alien or a nonresident alien (NRA) for federal tax purposes. As a result of the review, the payment may be subject to taxes and reported to the Internal Revenue Service (IRS).
Payments to foreign visitors who are not SDSU employees include, but are not limited to:
- Honoraria paid to guest speakers, special lecturers, distinguished visitors
- Compensation paid to consultants, performers, and other non-employees
- Travel expense reimbursements
Prior to inviting a foreign visitor, confirm that they have proper immigration status to perform independent services for SDSU. Immigration laws limit who can perform services and SDSU must comply with these laws. Also, performing unauthorized services is a breach of the terms of the foreign visitors’ visa and could affect their future immigration benefits.
Use the chart below to determine whether the foreign visitor is allowed to perform independent services for SDSU. Contact [email protected] for any questions on this chart.
|Allowed to perform independent services?
* the foreign visitor’s activity is academic in nature (lecture/presentation/etc.),
* the academic activity lasts no more than 9 days and
* the foreign visitor has not accepted payment from more than 5 institutions in the previous 6 months.
* SDSU is the sponsoring institution, or SDSU received written authorization from the sponsoring institution and
* service is performed within dates indicated on DS-2019.
|NO if SDSU is not the sponsoring institution.
|Contact [email protected].
Once it is determined that the foreign visitor has proper immigration status to perform independent services, collect the following documents from the foreign visitor and submit to Accounts Payable.
- Payment Request for Guest / Special Lecturer (For honorarium) or Invoice/Purchase Order (For other payments for services) (Procure-to-Pay)
- Foreign National Information Form
- Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) (Form W-8BEN) (IRS)
- Copy of passport page with expiration date and foreign visitor’s picture
- Copy of I-94, or passport page with a U.S. admission stamp indicating date of entry, immigration status, and expiration date
- FOR J-1 VISITOR — Copy of DS-2019 (If SDSU is not sponsoring institution, written authorization from the sponsor’s Responsible Officer is also required)
- FOR F-1 VISITOR — Copy of I-20, all 3 pages
- FOR TRAVEL EXPENSE REIMBURSEMENTS — Receipts for travel expenses (except for per diem)
Federal Tax Withholding
Generally, these payments are subject to 30 percent federal withholding unless an income tax treaty is applicable. This should be taken into consideration when determining the honorarium amount.
Residents (not always citizens) of certain foreign countries may be exempt from federal withholding under the applicable tax treaty between the U.S. and their country of residency.
Tax staff will contact the foreign visitor if a tax treaty benefit is available.
State Tax Withholding
The payment may also be subject to 7 percent state withholding when the amount exceeds $1,500. This should be taken into consideration when determining the honorarium amount.
Travel Expense Reimbursements
There will be no withholding when the payment is a travel expense reimbursement made under an accountable plan.
Requirements for travel expense reimbursements can be found in the SDSU Travel Policy Procedures and Regulations.