FIN 425–06: Payments to Postdoctoral Nonresident Aliens
To describe the policy for making scholarship, fellowship, grant, and stipend payments, for which services are not required, to nonresident alien postdoctoral students, researchers, and sponsored project participants
Internal Revenue Service
All payments for scholarships, fellowships, grants, and stipends, for which services are not required, made to postdoctoral students, researchers, and participants in sponsored projects
The Internal Revenue Service (IRS) requires that all fellowship, scholarship, grant, and stipend payments, for which services are not required, be made in accordance with IRS regulations. These regulations require that taxes be withheld from payments made to nonresident alien postdoctoral students, researchers, and sponsored project participants unless exempt due to a tax treaty.
The IRS also requires that all payments made to nonresident aliens be reported annually on IRS Form 1042S, Foreign Person’s U.S. Source Income Subject to Withholding. A copy of the form is sent to the nonresident alien at the time it is filed with the IRS. The IRS requires that Form 1042S be filed by March 15 following the calendar year in which payments were made to the nonresident alien.
All postdoctoral students, researchers, and sponsored project participants are required to declare their citizenship and U.S. immigration status if applicable, and to indicate whether they are in postdoctoral status, upon arriving at ASU. Payments to postdoctoral nonresident aliens will be subject to withholding unless:
If these requirements are not met, the payment will be reduced by 30 percent for federal withholding. A list of existing tax treaties between the U.S. and other countries is found in IRS publication 901, U.S. Tax Treaties, which is available from Financial Services (480/965–3601), the International Students Office (480/965–7451), and the International Programs Office (480/965–5965).
If an individual believes he or she is entitled to tax treaty benefits, he or she should contact the ASU tax compliance area (480/965–8479 or 480/965–0108) for an appointment to discuss the applicable tax treaty and complete the required forms to exempt the withholding requirement.
Payments cannot be made to a nonresident alien unless he or she is in the U.S. on a visa type that allows him or her to receive scholarship, fellowship, grant, or stipend payments (not for independent services). See FIN 425–02, “Immigration Status—Eligibility to Receive Payment,” for guidance on allowable payments to various immigration categories. Any additional questions regarding visas should be referred to the International Programs Office at 480/965–5965 or the International Students Office at 480/965–7451. For more information concerning payments made to nonresident aliens, contact at Financial Services at 480/965–8479 or 480/965–0108.
For additional guidelines on nonresident alien tax issues see the ASU Foreign Visitor Tax Guide issued by Financial Services. A copy of this guide may be obtained by calling Financial Services at 480/965–8479 or 480/965–0108.
|Various university departments||
|International Programs Office||
|Nonresident alien postdoctoral participant||
|Payables and Reimbursements||
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