Eligibility for a nonresident foreign national to receive compensation from a U.S. source depends on the person's visa status (discussed in Visa Status Requirements for Short-Term Foreign Visitors). Also see information on visa options for hiring international visitors at the International Student and Scholar Services website. Compensation, including honoraria, for professional or contractor services include (but are not limited to) these services or payments:
- Flat payments for living expenses
- Live performances
- Participation in scientific, educational, professional, or business conventions, conferences, or seminars
- Other services on a short-term, contract basis
- Reimbursement of lost income and other payments
- Business expense reimbursements
International scholars and visitors who receive any of these payments are generally subject to 30% federal tax withholding, unless the amounts are either exempt under the terms of a tax treaty, subject to a lower or reduced tax rate under the treaty, or exempt from tax under the Internal Revenue Code. For more details, see the topic, Tax Treaty Eligibility for Nonresident Foreign National Independent Contractors.
Lodging and travel expenses paid on a short-term basis, including per diem amounts paid for meals and incidentals, are not subject to tax withholding and reporting as long as they are substantiated business expenses following IRS "accountable plan rules" used to reimburse employee business expenses. For more information, see University policy Traveling on University Business.
All U.S.-source payments, except those exempt from tax under the Internal Revenue Code (that is, substantiated business expenses) made to, or on behalf of, nonresident foreign national contractors, must be reported on IRS Form 1042-S.
Note: Compensation paid for services performed by nonresident foreign nationals outside the U.S. is not subject to 30% withholding and not reported to the IRS.
Contractor Work Eligibility, Payment Process, and Tax Requirements
The information below may be of help when paying nonresident foreign national contractors.
- Visa Status Requirements for Short-Term International Visitors
- Restrictions on Payments to Short-Term International Visitors (B-1, B-2, WB and WT Visas)
- Tax Treaty Eligibility for Nonresident Foreign National Contractors
- Nonresident Foreign National Contractor Payment Processing
- Individual Taxpayer Identification Number (ITIN)
- Frequently Asked Questions about ITINs and Social Security cards