NRA Payments (non-resident aliens) How to correctly pay income to foreign individuals

VISA types  H-1 (long term – sponsor needed)  J-1 (max. 3 year stay – sponsor needed)  F-1 (max. 5 years – students)  B-1 (temporary for business)  B-2 (temporary for pleasure or medical)  B-1/2 (temporary for business & pleasure)  VWB (Visa Waiver for business)  24 countries have agreements with U.S.  Maximum 90 day card  VWT (Visa Waiver as a tourist)  Canadian entering without inspection  Only passport need to enter U.S.

Honorarium payment to NRA’s  College and Universities frequently make honorarium payments to foreign nationals for academic activities NOT involving employment.  The IRS defines an honorarium as a payment of money to a person for participation in a usual academic activity for which NO fee is required.

Who is eligible to receive an honorarium payment?  Any VISA type.  Activity must NOT last longer than 9 days at any single higher education institution.  Activity is conducted for the benefit of the institution.  Visitor has not accepted an honorarium from 5 other institutions during the past 6 months.

Eligibility cont.  If the activity DOES NOT meet these guidelines, the visitor MUST have a J-1 or H-1 VISA  All VISA types can be reimbursed for travel expenses.  Length of stay and work eligibility in the U.S. is monitored by the I-94 form (arrival / departure record). Every NRA is required to keep these documents in their passport.

Other taxable items  The IRS does consider free services given to NRA’s as taxable income. CC’s NRA tax specialist needs to be aware of these types of transactions.  Room and Board  Tuition  Books  Personal supplies / travel allowance

Documents needed for Honorarium payments  Recipient must complete a 8233 or W8-Ben  The institution must complete the withholding agent certification portion of the 8233 or W8-Ben and attach any tax treaty statements.

Overseas honorarium payments  The IRS allows institutions to contract with individuals in foreign countries and pay them for services they provide. These services are not considered taxable U.S. income as long as none of the services are performed on U.S. soil.  NO 8233 or W8-Ben is required

How can I help?  All employees need to take an active roll in documenting payments made to NRA’s.  All payments should be pre-approved by CC’s NRA tax specialist to insure compliance with state and federal tax laws.  CC’s tax specialist will determine if all appropriate paperwork has been completed.