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Payments to Foreign Visitors (Nonresident Aliens)

Due to special tax laws which apply to non resident aliens being paid in the U.S., the University must apply certain procedures for tax-withholding and tax-reporting. Individual circumstances can vary greatly depending upon the visitor's home country.

Payments for services performed in the U.S (and subsequent tax liabilities) are related to the visitor's visa status. For this reason it is important to anticipate visa needs when engaging a non resident alien for any service. The visa status chart may assist you in determing whether or not the NRA you wish to hire can legally work in the United States.

In the case of nonresident aliens, we are required to withhold taxes at the current rate of 30% (for federal taxes), plus applicable state tax, unless the nonresident is eligible for a tax exemption or reduction. Some nonresident aliens may be able to claim tax exemption or tax reduction due to an income tax treaty between the United States and the NRA's country of residence. Tax treaty listings are periodically updated and included in IRS Publication 901.

To claim a tax treaty exemption, a nonresident alien must complete IRS form 8233, Exemption from Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual and submit the form with the request for payment. In order to complete this form, the nonresident alien must have a U.S. taxpayer identification number or social security number. The visitor can obtain a taxpayer identification number (TIN) using IRS form W-7 Application for IRS Individual Taxpayer Identification Number. Form W-7 may be compelted by the NRA prior to his/her arrival in the United States. If the NRA does not have a tax identification or social security number, the NRA may not receive tax treaty benefits.

Individuals from countries for which there is no tax treaty must have the federal and state taxes withheld from any payment for services made by Brown. The individual may be able to request a refund of the taxes withheld by filing IRS Form 1040NR, Income Tax Return for Nonresident Aliens, at the beginning of the next year, after receiving IRS Form 1042S from the University.

The University is required to report payments for professional services to all non resident aliens (regardless of whether or not taxes were withheld) in a manner similar to that done for U.S citizens. In the case of U.S citizens, the University reports income using either IRS form W-2 or 1099. For nonresident aliens we use form 1042S.

The following procedure applies when making payment to a non resident alien:

  1. IF PAYMENT IS SOLELY TO REIMBURSE FOR ACTUAL EXPENSES, SUCH AS TRAVEL, HOTEL, MEALS AND THERE IS NO FEE FOR SERVICE (CONSULTING, HONORARIA, LECTURING):
    1. Use Travel Expense Report to request reimbursement. Attach all original receipts. Request is subject to Brown's Travel Policy. Check will be sent to the department. There is no requirement for tax withholding or tax reporting.
  2. IF PAYMENT INCLUDES A FEE FOR SERVICES, AN HONORARIUM, AND/OR A LIVING ALLOWANCE, THEN ALL EXPENSES SHALL BE ACCUMULATED AND SUBJECT TO THE FOLLOWING PROCEDURE:
    1. The individual is from a country which has tax treaty provisions for independent personal services, and wishes to file for tax exemption:
      1. Payment will be made through Accounts Payable. The following documents must be attached to the Guest Speaker or Professional Service Agreement:
        1. IRS form 8233, Exemption from Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual.
      2. Individual must furnish a taxpayer identification or social security number, complete and sign the form (available in the department) and submit with the request for payment. Accounts Payable will record payment as a 1042S reportable payment. At calendar year end, the University will report to the individual and the IRS as required.
    2. The individual is from a country which has tax treaty provisions for independent personal services, and does not wish to file for tax exemption; the University is obligated to withhold at the rate of 30% Federal tax, plus additional state tax:
      1. Payment will be made through the Accounts Payable Office, which will compute the applicable Federal and State withholding taxes and deduct from the amount requested.
      2. Individual must have social security or taxpayer identification number.
      3. Guest Speaker Agreement or Professional Service Agreement also needs to be completed.
    3. The individual is NOT from a country which has tax treaty provisions for independent personal services, the University is obligated to withhold at the rate of 30% Federal tax, plus additional state tax:
      1. Payment will be made as in (B) above.