Payments to Foreign Nationals
Qualification for Foreign Visitor Payment
One qualification for timely payment is that the individual be in a visa status which allows the College to make payments. The most common visa types that allow compensation for an honorarium are B-1, B-2, WB, WT, TN, and J-1. (Canadians admitted without an I-94 or TN visa are considered to be on a B-1 or B-2 visa). The B-1, B-2, WB and WT visa holders can be paid honoraria only if they are at the college no longer than 9 days and have not accepted payment or expenses from more that 5 institutions in the previous 6 month period. In order to receive a payment from Wofford College, the Business Office requires some information and paperwork be completed.
Foreign National Information Form
The Wofford Business Office requires that foreign nationals submit a Wofford College Foreign National Information Form (FNIF). The FNIF form can be completed online, then printed and signed. Also, have the visitor complete FORM W8-BEN and attach copies of the following:
- Copy of I-94 (a small white card inside your passport, COPY BOTH FRONT & BACK)
- Copy of information pages from PASSPORT including photo identification, passport number and US entry VISA.
- Copy of US SSN or ITIN card if available
Return all documents to Terri Putman, Wofford College Accounts Payable.
Payments to non-resident aliens are subject to a 30% mandatory withholding tax rate (i.e. If you are expecting a $200.00 honorarium, $60.00 will be withheld, and your total payment would be $140.00) unless exempted by a tax treaty between the visitor’s country of residence and the U.S. (other documents required, see tax treaty and form section below)
Travel reimbursements that are substantiated by adequate documentation (receipts, travel itinerary, etc.) are not considered compensation. They are not subject to withholding taxes, nor are they reportable to the IRS. To receive a check for travel reimbursements, submit a completed Expense Reimbursement Form along with documentation supporting the expenses, to Terri Putman in the Business Office. NOTE: Reimbursements that are not properly documented will be considered compensation.
Tax Treaty Exemption
While we discourage foreign nationals from seeking treaty exemption on honoraria because the payments are generally minor, the paperwork for the College and the recipient is substantial, and the recipient is generally no better off and might be worse off. The language and restrictions in treaties differ, and some treaties have limited privileges, which, if exhausted in one visit, cannot be reused in subsequent visits (or at least not used for some time). In addition, if we (the College) withhold tax, visitors will not be subject to double taxation. They can generally elect a tax credit in their home countries for taxes paid in the U.S. or can file U.S. tax returns for the appropriate refunds—albeit the IRS rejects returns unless they have U.S. federal ID numbers. If we grant treaty exemption, the IRS reports the income to the individual’s home county where they might be taxed there at various rates.
Forms for Exemption
In order to claim exemption, the foreign national must complete and sign Form 8233
prior to the receipt of payment. By law, Wofford must submit form 8233 to the government at least ten (10) days prior to the date of payment; thus, payment will be delayed if the Form is not correctly completed in advance of that time period. Conversely, if tax exemption is claimed under a tax treaty, a foreign national filing Form 8233
must have and provide a U.S. ITIN or SSN (A Canadian Social Insurance Number does NOT satisfy this requirement.)
An ITIN may be applied for by completing Form W-7 and attaching a copy of your passport. The copy of your passport MUST be notarized by a U.S. notary public. U.S. Notaries Public are available at US embassies and consulates worldwide. Foreign notaries are acceptable as outlined by the Hague Convention. Please note that it may take up to 8 weeks to receive an ITIN. Form W-7 can be mailed directly to the IRS, Philadelphia Service Center, ITIN Unit, PO Box 447, Bensalem, PA 19020 or dropped off at any local IRS center.
Tax Reporting Requirements
The IRS requires that honoraria payments be reported on an IRS Form 1042-S. Reporting is mandatory whether withholding is required or not. The Wofford College Business Office will issue an IRS Form 1042-S to the payees sometime prior to March 15 AFTER the end of the calendar year in which the payment was received.
Nonresident aliens will use the information reported on the Form 1042-S to file their individual Form 1040-NR tax returns. The nonresident aliens may request refunds of withholdings in excess of tax liability on the tax return. Please note that the IRS may not issue refunds to nonresident aliens until they obtain a taxpayer identification number. If tax was withheld from their payment, the nonresident alien may choose and is not required to file a US form 1040NR tax return and may decide to inquire of their country about a foreign tax credit when filing the return for their country of residence. If they have questions regarding tax return preparation or other related issues, they should seek the advice of a professional tax preparer. Wofford College cannot advise on these issues.
IRS forms are available at www.irs.gov/formspubs/