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Acknowledgments
Special thanks are made to Indiana University for the use of their
Foreign Visitor Tax Guide as a starting point for the publication by Arizona State University (ASU) of this Foreign
Visitor Tax Guide. This guide for ASU has been a collaborative effort of the following departments:
- Financial Services (Comptroller)
- Human Resources
- International Student Office
- Office of International Programs
Acknowledgment is also made of the consultant efforts provided by
the ASU General Counsel's Office.
Introduction
The purpose of this publication is to inform foreign students,
faculty, and staff of the rules under which Arizona State University
(ASU) operates, based on the tax and immigration laws of the United
States (U.S.). In addition, this tax guide is to be used as a
reference tool for university personnel who interact with foreign
students, faculty, and staff on a daily basis. However, no one
from any ASU department, while in their official role at ASU, can act
as a tax consultant, give personal, legal, or tax advice, or
represent an individual dealing with the Internal Revenue Service
(IRS).
This guide does not cover all tax situations; it covers only those
most common to the majority of foreign students, faculty, and staff.
It presents basic information about the tax status of various kinds
of university payments to students, faculty, and staff. Explaining
some of these tax regulations and qualifications is intended to
provide information that will assist foreign visitors and university
personnel in making the correct decisions concerning the tax
implications of payments that ASU makes.
ASU must fulfill its tax reporting obligations and can, in case of
a tax question or problem, assist in supplying appropriate documentation to explain payments made to individuals.
Users of this guide should be aware of the necessary limitations
on the information presented herein. While it is hoped that this
material will be useful, it should not be construed as either a
complete treatment of all tax or immigration questions, or an
official ASU statement as to the subject matter reviewed.
This publication in no way should be construed to be the rendering
of legal or tax advice. Each reader of this publication is
responsible for determining the extent to which the information
presented in this publication is appropriate to its situation. Each
reader should consult with qualified legal and/or tax counsel in
assessing its legal and tax obligations.
During March and April each year, assistance with tax preparation
is provided to foreign visitors to the U.S. by Vita Volunteers and
volunteers from the College of Law. Foreign visitors can call the
International Student Office at (480) 965-7451, or go to Room B-265,
Student Services Building, for specific dates and meeting places.
Foreign students, faculty, and staff with tax questions or
problems are advised to seek assistance from the IRS, a CPA, or
attorney. In the U.S., the individual taxpayer is
responsible for filing an appropriate and accurate tax return and
negotiating all tax matters with the IRS. Taxpayer assistance is
available from your local IRS office or by calling the IRS toll free
taxpayer assistance number, 1-800-829-1040.
Section One: Definition of Terms
1.1 Candidate for a Degree
A candidate for a degree is broadly defined to include any
fulltime or parttime student enrolled at ASU in a course(s) which may
lead to a degree, whether or not the student's particular educational
program leads to a degree.
1.2 Employee Wages
Employee wages are payments for services that an individual
performs or carries out for the university as an employee. Services
performed by an employee are subject to the direction and control of
the university, its faculty, or staff. Employee wages are not the
same as payments made to a foreign visitor for independent contractor
payments. See the discussion of independent contractor payments at
Section 1.10 below for the definition of nonemployment related
services. Employee wages can only be paid to foreign visitors who
have been granted an appropriate employment authorization and visa
status by the Bureau of Citizenship and Immigration Services (BCIS) to allow
them to be compensated for services. See further discussion at
Sections 2.1 and 2.2 of this guide.
1.3 Fellowships and Scholarships
Fellowship or scholarship payments are made to assist a person in
pursuing a course of study or research. Since 1987, the IRS allows
amounts paid to individuals as qualified scholarships and
fellowships to be excluded from taxable income (meaning the payments
are not taxable) if the following two requirements are both
met:
The scholarship or fellowship is awarded to a candidate for a degree
(see Section 1.1); and
The scholarship or fellowship is used to pay for (i) tuition and fees
required for enrollment or attendance at ASU, and/or (ii) other
mandatory fees, books, supplies, and equipment required to be used by
all students in a particular course of study.
Fellowship or scholarship payments made to foreign visitors may
include a combination of the following:
- tuition, fees, books, and courserelated materials
- stipends for living expenses including meals, lodging, and
other personal items
- medical insurance premiums paid to insurance companies
- airfare purchases from airline companies or travel service
providers.
Portions of fellowship and scholarship payments that are used for
meals, lodging, nonmandatory medical insurance, travel, personal
living expenses, or other noncourse related expenses are often
referred to as scholarship stipends, and must be included in taxable
income unless excluded by tax treaty. Also, fellowship or scholarship
payments made in exchange for employment related services, including teaching and research services,
are taxable unless a tax treaty exclusion applies.
A post-doctoral fellowship award is made to an individual to
further her/his pursuit of a course of study or research beyond the
doctoral level. The entire postdoctoral fellowship award must be
included in taxable income.
Acceptance by foreign exchange visitors or students of
fellowships and scholarships does not require work authorization by
the BCIS. If off-campus employment is involved in the fellowship or
scholarship, foreign students should check with the ASU Office of
International Students and Foreign Exchange Visitors should check
with the ASU Office of International Programs prior to accepting such
off-campus employment, since BCIS work authorization might be
needed.
1.4 Stipends
Direct financial support payments are sometimes referred to as
stipends which, per Webster's Dictionary, are sometimes
defined as wages. At ASU stipends are defined as a sum of money
periodically paid and can be either employee (or independent
contractor) compensation or a financial support (scholarship or
fellowship) payment depending upon the specific circumstances. When
referring to stipends, the qualifying words Compensatory or
Scholarship should be used to effectively communicate the correct
meaning to the term stipend. For example, Compensatory Stipend is a
stipend paid for services and Scholarship Stipend is a stipend paid
that has no compensation components associated with it.
1.5 Assistantships
Assistantships at ASU include graduate research, teaching, and
research positions. These positions involve work for compensation,
and require inclusion on ASU's payroll. Some foreign exchange
visitors and foreign students may accept these positions without
separate work authorization. However, with few exceptions, most other
nonimmigrant status holders may not. Students should check with the
ASU Office of International Students and Foreign Exchange Visitors
should check with the Office of International Programs before
accepting any such positions since BCIS work authorization might be
needed.
1.6 FICA
FICA (an acronym for the Federal Insurance Contribution Act)
is a tax that is assessed against employee wages paid to individuals
who are residents for tax purposes. This is a separate tax from the
federal income tax and is used to fund the retirement and medical
benefits paid by the Social Security Administration. One-half of this
tax (7.65% of wages) is withheld from the payments to the individual,
while the other one-half of this tax (also 7.65% of wages) is paid by
the university. Special rules and an expanded discussion of this tax
are included below in Sections 4, 6 and 7.
1.7 Immigrant (Resident Alien for Immigration
Purposes)
An immigrant, or resident alien for immigration purposes, is a
"green card" holder and is often referred to as a Permanent Resident
(PR), the term which we will use in this guide. A PR is a non-U.S.
citizen who has been authorized to live and work in the U. S.
indefinitely. It is also a status which one must hold before being
eligible to apply for U. S. Citizenship.
1.8 Department of State (DOS)
The DOS, operating through U.S. Consulates and Embassies outside
the U.S., has the exclusive authority to issue visas. Visas do not
guarantee admission to the U. S., but only allow one to present
himself/herself to the BCIS for physical entry to the U.S. Entry will
be granted if BCIS finds that the person's intent conforms to the
visa, i.e., a person with a tourist visa is not actually intending to
go to school or work.
1.9 Bureau of Citizenship and Immigration Services (BCIS)
The BCIS, part of the U.S. Department of Homeland Security (DHS), is responsible for admitting foreign nationals into
the U.S. Upon admission, which usually happens after presenting a
visa issued by the DOS, BCIS issues foreign nationals status in the nonimmigrant category in which they seek entry
and for which they qualify.
1.10 Independent Contractor Payments
Independent contractors are not the same as employees. In order
for an individual to be compensated as an independent contractor at ASU, the
following five criteria must all be met:
1. The university does not control or direct the performance of
the task; i.e., the individual is and will continue to be free to use
whatever means he or she deems appropriate to accomplish the task
2. The task or service being performed is outside the regular
expertise, duties, and/or consulting independence of existing
university employees
3. The individual is conducting, in an independent manner, a
business, trade, occupation, or profession and is responsible for:
(a) tools and materials required to perform the task, and
(b) hiring/managing/terminating any subcontractors or assistants
that are required to complete the task
4. The task is of short duration and is not indicative of an
ongoing relationship (Contractual relationships that are longer than
thirty days generally, indicate that an employee/employer relationship, rather than an independent contractor
relationship, exists), and
5. A written agreement exists with the university which spells out
the task or service(s) to be performed. The agreement or related
documents must contain:
(a) Contractor name, address, telephone number
(b) U.S. citizenship status (non-U.S. citizens must include visa
type, work authorization status, and number of days present in the U.S.)
(c) Corporate status (corporation, partnership, sole proprietor, not-for-profit)
(d) Nature and location of services to be performed
(e) Performance schedule (starting and ending dates)
(f) Department contact person and address.
If the relationship between the university and the provider of the
service or product does not clearly meet all of the
consultant/independent contractor criteria above, the individual must
be hired as an ASU employee.
Independent contractor payments can only be received by foreign
visitors whose visa status allows the receipt of such payments as a
matter of law. If the independent contractor is known to be a foreign
national, special care should be taken to make certain that the
individual is truly an independent contractor.
1.11 Internal Revenue Service (IRS)
The IRS is the U.S. government agency that collects taxes. To facilitate
this process, the IRS issues various forms, such as withholding
allowance certificates, income tax returns, etc. which are used to
help foreign visitors pay the taxes that apply to them. The IRS is
also the part of the U.S. government that determines how much is owed for individual income taxes, and whether an organization that pays income to a foreign
visitor is required to withhold tax from that income.
1.12 Nonimmigrant (Nonresident for Immigration Purposes)
A nonimmigrant, or nonresident for immigration purposes, is a
person who is not a citizen or a PR of the U.S. and has been admitted
to the U.S. under one of the nonimmigrant categories for a temporary
stay that will end when the purpose of that stay has been met.
1.13 Nonresident (for Tax Purposes)
A nonresident for tax purposes is a person who is not a U.S.
citizen and who does not meet either the "green card" test or the
"substantial presence" test described in IRS Publication 519, U.S.
Tax Guide for Aliens. Both of these tests are discussed
in detail in Section 4 of this guide and the website for Pub 519 and other publications are found in Appendix 2 of this document.
1.14 Resident (for Tax Purposes)
A resident for tax purposes is a person who is not a U.S. citizen
and who meets either the "green card" test or the "substantial
presence" test described in IRS Publication 519, U.S. Tax Guide
for Aliens. Both of these tests are discussed in detail
in Section 4 of this guide and the website for Pub 519 and other publications are found in Appendix 2 of the document.
1.15 Taxable Income
Any money paid to a foreign visitor or paid to a third party on
their behalf on which taxes are required to be paid to the U.S.
government is taxable income. Employee wages and stipend
payments are considered taxable income. State, county, and federal
income tax will be withheld by ASU from these payments at the
appropriate rate.
1.16 Taxes
Taxes are paid by individuals earning money in the U.S. Taxes are
used to support the various functions of the U.S. government.
1.17 Travel (Transportation, Meals, and Lodging In
Transit)
Travel payments can be made to foreign visitors in payment for, or
reimbursement of, a number of travel related expenses including the
cost of meals, lodging, and transportation costs such as air fare and
automobile rental, and other related expenses incurred while in
transit. There is no distinction between amounts paid directly to
travel service providers, such as airlines, and payments made
directly to the foreign visitor. ASU understands the tax laws to
allow that travel expenses that are paid or reimbursed by the
university in order to transport a foreign visitor to or from the
university will not be considered taxable income as long as the
traveler accounts to the university by providing actual receipts and
substantiation of the business purpose of the travel.
1.18 Withholding
Withholding means that the taxes a foreign visitor is obligated to
pay to the U.S. government will be taken out of the paycheck or
compensatory stipend check by ASU, then sent to the U.S. government,
as required by law.
Section Two: U.S. Tax Obligations of ASU and Sponsoring Departments
2.1 University Responsibilities
ASU is responsible for maintaining compliance with both the letter
and intent of all federal, state, and local laws. The implications
for university departments, faculty, and the foreign visitors that
they host are that ASU must maintain full compliance with federal,
state, and local tax laws, as well as federal immigration laws.
ASU also has a responsibility to the foreign visitors who come to
campus to pursue their education or other scholarly activities to
ensure that payments made to them by the university are properly
reported to the appropriate federal and state agencies. Properly
reporting payments that are made to foreign visitors will greatly
reduce the potential for future tax or immigration problems for
visitors. A number of university offices are available to assist
departments, faculty, and foreign visitors in gathering and
coordinating the appropriate information that is needed to maintain
compliance with the tax and immigration laws. Refer to Appendix 1 for
a list of the university offices which provide specific assistance
with these matters, and the types of services they provide.
2.2 Sponsoring Department Responsibilities
University departments that host foreign visitors will generally
be aware far in advance of their actual arrival date that the visitor will be coming to the university.
Accordingly, the hosting department or faculty member bears primary responsibility for
ensuring that payments are in compliance with federal and state tax
laws and immigration laws. This responsibility is also shared by a
number of university offices that are available to assist departments and faculty members in acquiring all of the
information and forms required by the federal government. Departments must ensure that no payments of any kind
are made to foreign visitors unless they have been granted the
appropriate authorization by the BCIS in advance of the
payments being made.
The Office of International Programs (for non-student visitors)
in Moeur Building, or the International Student Office (for student
visitors) in the Student Services Building, must be contacted
prior to making any contractual arrangement to pay a foreign
visitor, to ensure that violations of immigration law do not occur.
(Such violations could lead to fines of up to $10,000 per occurrence
assessed against ASU, and/or imprisonment of ASU personnel, and
detention or deportation of the foreign visitor).
2.3 Classification of Payments for Withholding
Purposes
Payments that are discussed in this tax guide fall into three
broad categories of:
- employee wages
- independent contractor payments
- fellowship and scholarship grant payments.
Be aware that certain types of payments to a foreign visitor
may be taxable, while other payments to the same visitor are not
taxable. Also, certain payments that are taxable to one foreign
visitor may not be taxable to a visitor from a different country
because of an exemption in a tax treaty. Accordingly, it is important
that the university determine the taxability (or nontaxability) of
each type of payment made to each foreign visitor in order to know
whether withholding is required and, if so, the amount required to be
withheld from the payment.
2.4 Foreign Source Income
Exclusions
2.4.1 For Services Performed Outside the U.S.
Payments that are made by ASU to nonresident aliens, for services
that the nonresident alien performs in a country outside of the U.S.,
are not subject to federal income tax withholding. This exclusion
applies only for services performed in a foreign country by an
individual who is not a citizen or resident of the U.S. The services
are considered to be "sourced" in a foreign country and, therefore,
are not subject to federal tax withholding.
2.4.2 For Grants Funded from Outside the U.S.
Fellowship and scholarship grants that are paid for with funds
that have come from the foreign visitor's country of residence (or
another country outside of the U.S.) are not subject to tax
withholding. Such grants are considered to be "sourced" in a foreign
country and, therefore, are not subject to federal tax withholding.
2.5 Federal Income Tax
All employee wages, independent contractor payments, and taxable
portions of fellowship and scholarship payments that a foreign
visitor receives from the university are considered taxable income,
unless they are specifically exempt from tax by a tax treaty. In
general, the university is required to withhold federal income tax on
foreign visitor income as follows.
2.5.1 For Nonresidents (See 1.11)
Employee Wages, generally, have income tax withheld at
graduated rates, plus an additional $7.60 per week unless
specifically excluded from tax by a tax treaty between the U.S. and
the foreign visitor's country of residence. Exemption must be claimed
by the visitor using IRS Form 8233.
Independent Contractor Payments have income tax withheld at
the rate of 30%, unless specifically excluded from tax by a tax
treaty between the U.S. and the foreign visitor's country of
residence. Exemption must be claimed by the visitor using IRS Form
8233.
Fellowship and Scholarship Payments have income tax
withheld at the rate of 14% on the taxable portions of the payment
(amount not used for tuition, books, fees, and course required
supplies and materials), unless specifically excluded from tax by a
tax treaty between the U.S. and the foreign visitor's country of
residence. Exemption must be claimed by the visitor using IRS Form
W-8BEN (see Appendix 2 for IRS forms and publications).
2.5.2 For Residents (See 1.12)
Employee Wages have income tax withheld at
the same graduated rates that are used to withhold tax on U.S.
citizens.
Independent Contractor Payments do not have
income tax withheld as the visitor is not considered to be an
employee.
Fellowship and Scholarship Payments do not
have income tax withheld.
2.6 FICA (Social Security Tax)
2.6.1 Employee Wages
FICA is withheld at the rate of 7.65%, with a matching percentage
paid on behalf of the individual by the university, unless
specifically excluded from tax by a tax treaty between the U.S. and
the foreign visitor's country of residence.
Special exemptions are available from FICA withholding under
certain circumstances:
- services performed by nonimmigrants temporarily in the U.S. in
F-1, J-1, or M-1 status, which are consistent with that status,
are exempt from FICA as long as the nonimmigrant is
classified as a nonresident for tax purposes.
- Services performed by a nonresident student in F-1, J-1, or
M-1 status, who is employed by the university while enrolled and
regularly attending classes are exempt from FICA.
- services performed for a foreign government are exempt from
FICA.
- services performed for an international organization are
exempt from FICA.
2.6.2 Independent Contractor Payments
Payments for services rendered by an independent contractor do not
have FICA tax withheld.
2.6.3 Fellowship and Scholarship Payments
Payments for fellowships and scholarships do not have FICA tax
withheld.
2.7 Arizona State Taxes
All employee wages, independent contractor payments, and taxable
portions of fellowship and scholarship payments that a foreign
visitor receives from the university are considered income for state
income tax purposes. In general, the university is required to
withhold state income taxes for employee wages in the same way as is
outlined in the discussion of federal income taxes in Section 2.4
above. If some or all of the income is exempt from federal taxes, the
same income is exempt from state taxes.
2.8 Exemptions From Income Tax Withholding
Requirements
A number of possible exemptions from withholding may apply to a
nonimmigrant. Several have been mentioned above, but a more complete
listing follows:
Foreign Source Income is not subject to withholding.
Foreign source income is income that comes from a payer whose
residence is outside the U.S.
Tax Treaty Exemptions From Taxation and Withholding may apply, but must be evaluated on a
country by country basis. Refer to Section 9 and IRS Publication 901 found in Appendix 2 of this guide.
Per Diem Payments for US AID Grants may be exempt from
withholding but only if the foreign nonimmigrant is involved in a
USAID training program in the U.S.
2.9 Required Forms
Foreign nonimmigrants from countries that have entered into a tax
treaty with the U.S. may be able to exclude all or a portion of the
payments that they have received from U. S. Sources under the
provisions of that treaty. If a tax treaty exists between the foreign
nonimmigrant's country of residence and the U.S. that allows some or
all of the nonimmigrant's income to be considered nontaxable, the
nonimmigrant must provide certain forms to the university.
Appendix 3 contains a form processing flowchart.
2.10 Penalties and Sanctions
The IRS has recently initiated a series of audits of colleges and
universities that focus on compliance with the nonresident alien
area of the tax laws that are discussed in this guide. In cases
where taxes have not been withheld, the IRS may assess the
university the full amount of tax that should have been withheld,
along with penalties and interest charges, even if the tax was
ultimately paid by the foreign visitor on his/her U.S. tax return. In
the event that such an assessment would occur, these
amounts will be billed back by the university to the department not
adhering to the prescribed procedures relating to nonresident alien
payments.
Section Three: U.S. Tax Obligations For Foreign Nationals
3.1 Tax Basics for Nonresidents (for Tax
Purposes)
A nonresident's tax responsibility is complex. The definition of
what to include as income and what might be exempt from taxes can be
confusing. This Foreign Visitor Tax Guide is basically
designed to help the nonresident alien. Therefore, the following
information is provided in some detail to inform and direct the
nonresident alien in tax basics as they relate to the individual's
tax obligation.
Remember, the definitions of nonimmigrant, an immigration law term
(see Section 1.12), and nonresident, a tax law term (see Section
1.13), are not the same. One can be a nonimmigrant for
immigration purposes (see Section 1.12) and still be a resident for
tax purposes (see Section 1.13).
Income received by a nonresident may be subject to income tax.
However, a nonresident may be exempt from paying U.S. income tax
because of a tax treaty between the U.S. and his/her country of
residency. The U.S. currently has treaties with 62 countries. Each
treaty is different. A payment must meet the strict requirements of
the treaty in order to be exempt from tax. If the income is not
exempted by a tax treaty, the nonresident alien pays U.S. tax only on
income from sources inside the U.S. A nonresident receives
no tax exemption for dependents. All nonresidents must file
IRS Form 1040NR (Income Tax Return for Nonresident Aliens) on or
before April 15 (June 15 if no wages are earned) each year, even if
all income is exempt from tax because of a treaty (see Section 3.2.2
below).
Striking differences exist between the taxation of residents and
nonresidents of the U.S. The basic characteristics of the nonresident
taxation follow:
1. Tax is generally levied on U.S. source income only.
2. Tax treaty provisions may exempt some income from tax.
3. Interest income may be tax free.
4. Nonresident aliens cannot file jointly with their spouse.
5. Generally only one personal exemption is allowed regardless of
family status.
6. No standard deduction is permitted except by India.
7 . Itemized deductions are limited to:
State and local taxes withheld.
Contributions to charity.
Casualty/theft losses.
Miscellaneous business deductions.
8. Investment income is generally taxed at a flat 30%.
9. No child or dependent care credit is permitted.
A number of special rules regarding the standard deduction and
spousal exemptions are in effect for residents of certain countries,
such as India, Canada, Mexico, Japan, and Korea. Residents of these
countries should contact the ASU Human Resources, Records and Payroll
Office, for additional information on these rules.
3.2 Nonresidents U.S. Nonresident Alien Income Tax
Return (Form 1040NR)
3.2.1 What To File
A nonresident files her/his tax return on Form 1040NR "U.S.
Nonresident Alien Income Tax Return". ASU will report earnings to
nonresident aliens on a Form W2 and/or a Form 1042-S. Nonresidents
must file an annual tax return if they earned any U.S. source
income during the tax year. Holders of F, J, and M visas are
required to file Form 1040NR, even if they earned no income at all
during the calendar year. In addition, an individual who has
had too much tax withheld from her/his wages will want to file in
order to claim a refund.
3.2.2 When To File
If the nonresident earned employee wages subject to withholding
during a year, her/his tax return must be filed on or before April
15, of the following year. If no U.S. employee wages were received,
the return is due June 15, of the following year.
3.2.3 Where To File
All nonresident tax returns are mailed to: Internal Revenue
Service Center
Philadelphia, Pennsylvania 19255
3.2.4 Additional Tax Information Statement
For all nonresidents for tax purposes, the
IRS is requiring a statement detailing the basis of the individual's
claim to nonresident alien status. This statement should be filed
with the IRS Form 1040NR (Income Tax Return for Nonresident Aliens)
on or before April 15 of each year, or June 15 if no U.S. source
income has been received.
3.2.5 Tax Return Record Keeping
Every taxpayer should retain a photocopy of the completed tax
return and any documentation submitted with it. Proper response to an
IRS inquiry regarding a prior year's return is virtually impossible
without an exact copy of that return. Occasionally circumstances
require the taxpayer to submit a copy of a prior year return to the
IRS. In addition, nonimmigrants applying to the BCIS for permanent
residence may be required to produce copies of their tax returns
previously filed.
3.3 Residents U.S. Individual Income Tax Return (Form
1040)
A person who meets the tax definition of resident (see Section
1.14) pays U.S. tax on income from all sources worldwide and cannot
take advantage of tax treaties between the U.S. and other
countries. Individuals who are resident aliens for tax purposes
can claim exemptions for dependents. Determination of residency
status for tax purposes is discussed further in Section 4 of this guide. A resident's income is generally subject to tax in the same manner as a U.S. citizen; that is, a resident is taxed on and must report income from all sources, including those outside the U.S.
Foreign nationals who are residents for tax purposes must report
all interest, dividends, wages, or other compensation for services,
income from rental property or royalties, and other types of income,
whether from sources within or outside the U.S., on IRS Form 1040,
1040A, or 1040EZ. The university will report earnings to resident
aliens on a Form W2 (for employee wages) or a Form 1099 (for
independent contractor services) that must be filed with the tax
return. See Appendix 2 for examples of these forms.
3.4 Certificate of Compliance "Sailing Permit" (IRS Form 1040C
or Form 2063)
A Certificate of Compliance, or "Sailing Permit," is a form that a
nonresident, for tax purposes, must file with the IRS to demonstrate
that he/she has paid all applicable U.S. taxes before leaving the
U.S. Holders of F1, J1, H3, and H4 visas are not required to
obtain the Certificate of Compliance if they had no U.S. source
income other than (a) allowances or payments to cover study expenses
(including travel, maintenance, and tuition) or (b) wages from
authorized work (including practical training). Permanent
residents (green card holders) and all nonresidents with nonimmigrant
status other than F-1, J-1, H-3, and H-4 must still obtain a
Certificate of Compliance from the IRS before leaving the U S.
The following information will be useful to foreign nationals who
must obtain a Certificate of Compliance prior to departure from the
U.S.:
- IRS Form 2063 is required if the foreign visitor owes
no U.S. tax at time of departure.
- IRS Form 1040C is required if the foreign visitor owes U.S.
taxes at time of departure.
- The appropriate form should be obtained and filed at least 14
days before departure, but no more than 30 days before departure.
- The appropriate form can be obtained from the local IRS
office. An IRS employee will provide assistance to the visitor in
completing the form.
3.5 Social Security or Tax Identification
Number
A foreign national must obtain either a social security number or
an IRS Taxpayer Identification Number (ITIN) if he/she is required to
file a tax return with the IRS.
A social security number for work purposes can be issued only to
those foreign nationals who have authorization to accept employment
either by the BCIS or by operation of law. The social security or tax
identification number can be obtained by filing at the local Social
Security Administration Office. In addition to having a completed
Form SS-5, foreign nationals who are applying for a social security
or tax identification number must have their passport and at least
one other piece of identification with them when they visit the
Social Security Administration Office. (Appendix 1 contains a listing
of the Social Security Administration Offices nearest to each of the
ASU campuses).
An ITIN can be issued to those nonimmigrants who can not obtain a
Social Security Number but who can accept payments from other
sources, i.e., as a guest lecturer. The ITIN can be obtained by
filing Form W-7 with the IRS either by mail or by person. Original or
certified copies of documents that substantiate the information on
the Form W-7 must also be submitted with the IRS Form W-7. Examples
of acceptable documents include an original passport, driver's
license, birth certificate, identity card, or U.S. Immigration
documents. If a copy of an original document is submitted, it must be
certified by the issuing agency or by a person legally authorized to
certify that the document is a true copy of the original. Beware of mailing originals as they may not be returned.
In some countries, foreign nationals can apply for a social
security number or ITIN at the U.S. Embassy prior to their arrival in
this country. These countries include: Bonn, Germany; London, England; Mexico City, Mexico; Ottawa, Canada; Rome, Italy; Santiago, Chile; Singapore; Sydney, Australia; and Tokyo, Japan.
Foreign visitors who wish to claim tax treaty exemption for
any type of payment must have a social security or tax identification
number or proof of application prior to receiving payment.
The number belongs to them for their lifetime.
3.6 Penalties and Sanctions
Failure of a nonresident to comply with the U.S. tax law can lead
to the imposition of fines and penalties by the IRS. Failure to file
the appropriate tax returns or making intentionally false statements
on these returns can lead to criminal penalties.
Section Four: Residency Determination for Tax Purposes
4.1 Resident for Tax Purposes
A resident for tax purposes, hereafter called a tax
resident, is a person who is not a U.S. citizen and who meets either
the "green card" test or the "substantial presence" test described in
IRS Publication 519, U.S. Tax Guide for Aliens. (see Appendix 2).
With regard to residency determination for tax purposes:
- F and J students are generally considered
tax residents after their first five (5) calendar
years in the U.S.
- J nonstudents (researchers, scholars, teachers, etc.)
are generally considered tax residents
after their first two (2) calendar years in the U.S.
- H temporary workers (H-1, H-2), trainees
(H-3) and their spouses and minor, unmarried children
(H-4) are considered tax residents only if they meet
the "substantial presence" test described in Section 4.4 of this
guide.
4.2 Nonresident for Tax Purposes
A nonresident for tax purposes is a person who is not a
U.S. citizen and who does not meet either the "green card" test or
the "substantial presence" test described in Publication 519,
U.S. Tax Guide for Aliens. With regard to residency
determination for tax purposes:
- F and J students are generally considered
nonresidents during their first five (5) calendar
years in the U.S.
- J nonstudents (researchers, scholars, teachers, etc.)
are generally considered nonresidents during their
first two (2) calendar years in the U.S.
- H status holders are considered nonresidents
unless they meet the "substantial presence" test
described in Section 4.4 of this guide.
4.3 Green Card Test
Under the "green card" test, a person is a resident for tax
purposes if he/she is a permanent resident (PR) of the U.S., a status
which only the BCIS or the DOS can grant. While this status is usually
identified by an alien registration card, known as the "green card,"
the person need not be in possession of the "green card" itself to
hold the status. The right to lawful permanent residence is granted
at the time of the final interview with BCIS or DOS officials and can
be evidenced not only by the "green card" but also by a stamp in the
applicant's passport which states "temporary evidence of lawful
permanent status." The "green card" may not be manufactured or mailed
for several months after the final interview, and this stamp provides
immediate proof of permanent status. Further, if the card is lost,
the holder does not lose the status, or the rights and obligations
inherent in it.
4.4 Substantial Presence Test
4.4.1 Counting Days
A person is a resident for tax purposes if he/she meets the
substantial presence test for the calendar year. To meet this test,
the person must be physically present in the U.S. on at least:
(a) 31 days during the current year, and
(b) 183 days during the threeyear period that includes the current
year and the two (2) years immediately before that, counting:
- all the days the person was present in the current year,
and
- 1/3 of the days the person was present in the first year
before the current year, and
- 1/6 of the days the person was present in the second year
before the current year.
4.4.2 Days That Are Not Counted
A J-1 nonstudent (professor, researcher, etc.) who is
substantially complying with the requirements of that status, does
not count days for the first two (2) calendar years.
An F-1or J-1 student who substantially complies with the
requirements of that status does not count days for the first five
(5) calendar years.
It is important to note that the counting rules are based on a
"calendar" year, not a 12month period. For example, a foreign
national enters the U.S. on December 15, 1996. For purposes of the
substantial presence test, 1996 is the "1st calendar year," even
though the foreign national was present for only sixteen (16) days of
that calendar year. 1997 is the "2nd calendar year." This
individual's exemption would end effective December 31, 1997.
4.4.3 Circumstances That Disqualify One From the Substantial
Presence Test
A person will not meet the "substantial presence" test if (1)
he/she is present in the U.S. on fewer than 183 days during the
current year, and (2) it is established for the current year that the
person has a tax home in a foreign country that has a "closer
connection" to that country than to the U.S. The "closer connection"
exception is discussed in detail in IRS Publication 519, U.S. Tax
Guide for Aliens.
To retain nonresident tax status after five (5) years, F1 students
must be present in the U.S. fewer than 183 days and must establish
that they have a tax home in a foreign country and that they have a
closer connection to that country than to the U.S.
Section Five: Short Term Visitors
5.1 Immigration Law Restrictions
In past years, immigration and tax law restrictions were rather
loosely interpreted by many colleges and universities; however, the
IRS and the Bureau of Citizenship and Immigration Services have recently
undertaken stricter enforcement measures. This may impact on those
who are hosting foreign faculty, scholars, researchers, performers,
artists, or those performing other services. However, these
restrictions should not discourage anyone from inviting foreign
visitors to ASU for short-term stays. In most cases, it is possible
to legally reimburse them for expenses (such as accommodations and
travel) and/or pay them for services performed for ASU, provided
that the foreign national holds the proper status, typically J-1.
ASU faculty members who travel abroad, and who may extend an
invitation to a foreign colleague, should be aware that for some
countries it may take several months to obtain the proper visa, and
that the visa does not guarantee entry. (see Section 1.7).
In order to ensure that (a) foreign visitors can receive the
appropriate payments, (b) they are not denied entry into the U.S.,
(c) they do not have more taxes withheld than are necessary, and (d)
hosting departments are not assessed fines by the IRS or the BCIS,
faculty members who plan to host foreign nationals should have their
departmental payroll clerk or account manager contact the ASU Office
of International Programs (for non-student visitors) or the ASU
International Student Office (for students) prior to making any
contractual arrangement to pay or reimburse a foreign national
invited to ASU.
5.2 B-1 and B2 Visas
5.2.1 B1 Visitor for Business
Foreign visitors present in the U.S. in B1 status are prohibited
from being paid a salary, wage, or other form of compensation
for services rendered from a U.S. source. The only types of
payments that a B1 may receive while in the U.S. are as follows:
- Reimbursement for expenses including accommodations, meals,
and travel expenses. Payments may be made directly or to the
provider of the service (subject to ASU Travel Policy
restrictions).
- Scholarship or fellowship grants where the visitor is enrolled
in a course of study and renders no services for the university
(subject to restrictions imposed by the Fellowship Office).
- Prizes and awards.
See Section 5.3 below for limited exception.
5.2.2 B2 Visitor for Tourism
Foreign visitors in the U.S. in B-2 status are prohibited from
receiving compensation of any kind. Payments made on behalf of the
visitor for things such as lodging or transportation may be allowed,
depending upon their source, i.e., per diem paid by a foreign
source is acceptable.
See Section 5.3 below for limited exception.
5.2.3 Visa Waiver for Business (VWB) and Tourism
(VWT)
The U.S. waives tourist visas for citizens of certain countries,
such as Canada and nations who are members of the European Economic
Community. However, under U. S. Immigration laws, the legal status of
foreign nationals who are in the U.S. under Visa Waivers for Business
(VWB) and Visa Waivers for Tourism (VWT) is identical to those
holding the actual "B" visas. In other words, VWBs, like B-1s, can
only receive expense reimbursements, prizes, scholarships, or
fellowships. VWTs, or B-2s, cannot receive compensation payments of
any kind.
5.3 Limited Exception to B1 and B2 Visa Holders
A limited exemption applies to foreign visitors to Colleges and Universities temporarily in the U.S.
B-1, B-2, WB, and WT visa holders may be paid an honorarium for usual academic activity not exceeding nine days in duration, provided that such individual has not received honoraria from more than five educational institutions in the previous six-month period.
B-1 and WB visa holders may be reimbursed for reasonable travel and/or incidental expenses incurred in connection with a University activity, regardless of the duration of the University activity and regardless of whether the individual has previously received payment from other educational institutions.
B-2 and WT visa holders may be reimbursed for reasonable travel and/or incidental expenses incurred in connection with usual academic activity not exceeding nine days in duration, provided that such individual has not received travel from more than five educational institutions in the previous six-month period.
The individual must fill out and sign a compliance statement stipulating that these conditions have been met. (See Appendix 4)
Immigration regulations for the limited exception for B1 and B2 Visa holders have not been issued. Some experts have questioned whether the exception granted in the 1998 Law applies to WT and WB individuals. Along with many other institutions of higher education ASU will allow the application of this limited exemption to payments to WT and WB guest lecturers.
5.4 J-1 Short -Term Scholars
5.4.1 Possible Sources of U.S. Income
J-1 Non-students (professors and researchers) May be
employed on campus in activities related to their program objective.
Permission for off-campus employment must be approved in advance by
International Programs and may be granted only for participation in
occasional lectures or short-term consultations.
5.4.2 Tax Implications
Refer to Sections 2.4 2.6 of this guide to determine whether
federal income tax, FICA tax, and/or state and local income tax apply
to the type of payments being made to the foreign national.
5.5 Income Tax Withholding
In general, all income paid by the university to a foreign
national is taxable unless the income is exempt from tax
under the provisions of a tax treaty between the U.S. and the
person's country of residence, under a provision of the Internal
Revenue Code, or pursuant to a determination by the Assistant Director for Tax that the income
is not U.S. sourced income.
The university is required by law to withhold taxes
from these payments at the following rates, unless the income is specifically exempt.
- Employee wages: taxed at graduated income rates
- Fellowship & Scholarship: 14% income tax
- Independent Contractor payments: 30% income tax
Section Six: F-l and J-l Students
6.1 General Provisions
F-1 and J-1 students, including medical residents and
clinical fellows, are generally considered nonresident aliens for tax
purposes for their first five (5) years in the U.S.
F-1 and J-1 category students who have been in the U.S. for more
than any part of five (5) consecutive years are generally considered to be
resident aliens for tax purposes. F-1 and J-1 students become
eligible to use the substantial presence test after five (5) years as
nonresident aliens. For example, a J-1 student who arrived in the
U.S. in 1998 files nonresident alien tax returns (IRS Form 1040NR)
from 1998 through 2002. The student passes the substantial presence
test (described in Section 4.4 of this guide) in 1997. The J-1
student is considered a resident alien for tax purposes in 2003 (see
Section 3.3).
All F-1 and J-1 students who have been in the U.S. for more than any part of five (5) years will be treated as resident for tax purposes
unless they establish to the satisfaction of the IRS that they
are complying with the terms of their student status and do not
intend to permanently reside in the U.S., and they provide to the
university a written statement from the IRS substantiating their
continued nonresident status.
All J-1 students who are paid as university employees or
independent contractors must be prepared to provide verification that
they have work authorization on an annual basis, i.e., every
year that they are present at ASU.
6.2 Possible Sources of U.S. Income
F-1 students and J-1 Exchange Visitor (students) may be
employed on and off-campus under certain circumstances.
Off-campus work requires specific work authorization. Practical
training for F-1 students and academic training for J-1 students is
allowed, sometimes before graduation. Practical training is possible
for up to twelve (12) months for F-1 students. Academic training for
undergraduate and pre-doctorate training is possible for up to
eighteen (18) months for J-1 students. Post doctoral J-1 students may
receive up to 36 months academic training. Students should check with
the ASU Office of International Students and Foreign Exchange
Visitors should check with the ASU Office of International Programs
to see if they are eligible for any of these types of employment.
6.3 Tax Implications
Refer to Sections 2.4 and 2.6 of this guide to determine whether
federal income tax, FICA tax, and/or state and local income tax apply
to the type of payments being made to the foreign visitor.
Section Seven: J-1 Scholars (Professors and Researchers)
7.1 General Provisions
J-1 non-students (professors, researchers, etc.) are
generally considered nonresidents for tax purposes for their first
two (2) calendar years.
J-1 non-students who have been in the U.S. at least two (2) years
are generally considered to be resident aliens for tax purposes. J-1
non-students become eligible to use the substantial presence test
after two (2) years as nonresident aliens. For example, a J-1 teacher
who arrived in the U.S. in 2001 files nonresident tax returns (IRS
Form 1040NR) for 2001 and 2002. The teacher passes the substantial
presence test in 2003. The teacher is considered a resident alien for
tax purposes in 2003.
7.2 Possible Sources of U.S. Income
J-1 Nonstudents (professors and researchers) may be employed
on campus. Permission to work off campus is very restrictive and must
be approved by the ASU Office of International Programs prior to the
employment.
7.3 Tax Implications
Refer to Sections 2.4 and 2.6 of this guide to determine whether
federal income tax, FICA tax, and/or state and local income tax apply
to the type of payments being made to the foreign national.
Section Eight: H-lB, O, P, & TN Visa Status (Temporary Workers and
Trainees)
8.1 General Provisions
H-1Bs, the category restricted to temporary workers in
specialty occupations, are generally considered nonresidents for tax
purposes unless they meet the "substantial presence" test. There is
no specific amount of time that H-1Bs will be considered nonresidents
unlike those holding F and J status.
The O and P categories are restricted to artists,
performers, and aliens of extraordinary ability. Those holding this
status are treated in the same manner as the H-1Bs.
The TN category is restricted to Mexicans and Canadians,
as it is part of the North American Free Trade Agreement (NAFTA). TN
is similar to the H-1B category, but will be a pre-selected list of
occupations which Canada, Mexico, and the U.S. agree are "specialty
occupations."
8.2 Possible Sources of U.S. Income
The H-lB, O, P, and TN categories (except H-4 dependents)
allow for employment of a foreign national exclusively on the campus
of the sponsoring institution. Additional employment is possible only
with approval of additional petitions approved by the BCIS.
8.3 Tax Implications
Refer to Sections 2.4 - 2.6 of this guide to determine whether
federal income tax, FICA tax, and/or state and local income tax apply
to the type of payments being made to the foreign national. In
addition, H-1Bs are subject to FICA withholding. It is important to
note that any change of nonimmigrant status to H-1B status
(i.e., F-1 student to H-1B specialty occupation) must be communicated
to the ASU Human Resources, Records and Payroll Office,
immediately.
Section Nine: Tax Treaties
Residents of certain foreign countries may be entitled to reduced
tax rates, or exemption from tax, under an applicable tax treaty
between their country and the U.S. The hosting department or foreign
national must notify their campus payroll office that the
person is a resident of a country with which the U.S. has an income
tax treaty.
Notification that the individual qualifies for a reduced rate of
income tax withholding, or exemption from income tax withholding must
be received before this exemption can be granted. The foreign
national will also need to submit certain IRS forms (Form W-8BEN or
Form 8233, depending on the type of payment that he/she is receiving)
that authorize the university to grant the treaty exemption. It
is important to note that the existence of a treaty between the U.S.
and the foreign national's country of residence does not always mean
that the types of payments made by ASU to the foreign national are
exempt from tax under his/her country's tax treaty. In addition,
certain countries place specific dollar limitations on the amount of
money that can be exempt from tax under their treaty. Contact
the payroll office to determine the specific treaty
provisions available for each foreign national.
As of 9/30/2002 there are tax treaties in force between the U S. and the
following 61 countries:
| Armenia |
Egypt |
Italy |
Netherlands |
Spain |
| Australia |
Estonia |
Jamacia |
New Zealand |
Sweden |
| Austria |
Finland |
Japan |
Norway |
Switzerland |
| Azerbaijan |
France |
Kazakstan |
Pakistan |
Tajikistan |
| Barbados |
Georgia |
Korea, Republic of |
Philippines |
Thailand |
| Belarus |
Germany |
Kyrgyzstan |
Poland |
Trinidad and Tobago |
| Belgium |
Greece |
Latvia |
Portugal |
Tunisia |
| Canada |
Hungary |
Lithuania |
Romania |
Turkey |
| China, Peoples Republic of |
Iceland |
Luxembourg |
Russia |
Turkmenistan |
| Cyprus |
India |
Mexico |
Slovak Republic |
Ukraine |
Czech Republic |
Indonesia |
Moldova |
Slovenia |
United Kingdom |
| Denmark |
Ireland |
Morocco |
South Africa |
Uzbekistan |
| |
|
|
|
Venezuela |
Benefits of tax treaties vary widely, depending on the
particular country involved. For example, the tax treaty with the
People's Republic of China exempts all personal service income
received by Chinese teachers, lecturers, and researchers, but
provides an annual personal services exemption of only $5,000 to
Chinese students.
IRS Publication 901 summarizes the benefits available to these
nonresident aliens by virtue of their tax treaties. Copies of
Publication 901 are available at your campus payroll office. A Table
of Tax Treaty provisions found in Publication 901 is included in
Appendix 4 of this booklet.
Section Ten: Payment Processing Requirements
Departments who are planning to invite a foreign national to ASU
and either pay the foreign individual a honorarium or expense
reimbursement must take the necessary steps to bring the foreign
national into the U.S. under an appropriate visa status that will
allow ASU to make payment to the individual. For this reason the
departments need to work with the International Programs Office in
inviting nonresident aliens to the U.S.
The following forms are to be completed by the foreign national
upon his arrival to ASU.
ASU Independent Contractor Certification
Form.(Adobe Acrobat version) This
form must be completed by all individuals and other entities wishing
to be paid by ASU. In addition to obtaining a declaration of U.S. or
Non U.S. residency status, the form also asks for the U.S. Social
Security Number or other U.S. Taxpayer Identification Number.This form is necessary to set the individual up on the vendor tables in Advantage.
ASU Alien Data Collection Form.(Adobe Acrobat Version) This form must be completed by the
foreign national before payment can be facilitated at ASU. The
instructions to this form require that a copy of the foreign
national's I-94 (visa status) record and passport page with his/her picture be
attached to the form.
IRS Form 8233, Exemption From Withholding on Compensation
for Independent (and Certain Dependent) Personal Services of a
Nonresident Alien Individual.(Adobe Acrobat
Version) This form is filed by ASU with the IRS in order
for all payments related to compensation for services to be exempt
from withholding tax under a tax treaty. This form must be completed
properly, filed by ASU with the IRS, and then held 10 days before
payment can be made to the individual. Only those individuals
eligible for tax treaty benefits need to complete this form. As of 12/31/1999 the Federal government has stipulated an
ITIN or a Social Security Number is mandatory for processing this form. Forms 8233 that are not
properly completed will be returned unapproved by the IRS and taxes will be withheld at the required 30% rate.
IRS Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for U.S. Tax
Withholding. (Adobe Acrobat
Version) This must be filed with the university by the
foreign national in order for fellowship and scholarship payments to
be exempt from withholding tax under a tax treaty. Only those
individuals eligible for tax treaty benefits need to complete this
form.
Appendix 3 is a useful guide in determining what documents need to
be attached to the request for check to process a payment to a
nonresident alien individual.
Appendix 1: Offices Providing Additional Assistance
1.0 University and Government Offices
ASU's Financial Services Office (Independent contractor payments and
scholarships/fellowships) Tax Services webpage
ASU Human Resources (Employee wages) Hiring and Payroll
ASU Office of International Programs (Non-student foreign visitors) ) IPO website
ASU Office of International Students (ASU foreign students) ISO website
Social Security Administration office locations:
SCOTTSDALE
3200 N. Hayden Rd.
Suite #B-120
(between Thomas and Osborn - west side of street)
MESA
1801 S. Extension
(1 block NE of Baseline and Extension)
public transportation available
PHOENIX
1122 N. 7th St. Suite 100
(South of I-10, SW corner of 7th ST. and Moreland)
OFFICE HOURS 9:00 A.M. to 4:00 p.m.
If you have additional questions, call the main Social Security
Office at 1-800-772-1213.
2.0 Obtaining a Social Security Number
Arizona State University requires that all employees have a social
security number. For information about obtaining a social security number go to SSA's website. You will need to apply in person at a Social
Security Administration office. Certain documents will be necessary to prove identity, along with a completed application.
1. If you were born in the U.S. and have never had a social
security number, you must complete the form and show them documents
that show your age, citizenship, who you are, and that you have the
right to work in the U.S. Usually, if you are a U.S. citizen, all you
need are:
- Your birth certificate; AND
- Some form of identify, such as a driver's license, school
record, or medical records.
2. If you are a United States citizen who was born outside the
U.S., they need to see your consular report of birth (FS-240 or
FS-545), if you have one. They also need to see one form of
identification.
If you do not have your consular report of birth, they will need
to see your foreign birth certificate and one of the following: a
U.S. Citizen ID card, U.S. passport, Certificate of Citizenship, or a
Certificate of Naturalization. Remember, you must show them the
original documents.
3. If you are not a U.S. citizen, you must show your birth
certificate or passport. You will also have to get documents from the Bureau of Citizenship and
Immigration Services (BCIS), (formerly the Immigration and Naturalization Service) showing your
immigration status and eligibility to work while in the United States. Because these documents
should not be mailed, you should apply for a social security number in person.
Here are some examples of the documents you must bring:
Age: A birth certificate is generally the best evidence of age, and must be presented if it is in
your possession or can easily be obtained. If not, the SSA can consider other documents, such as your
passport or a document issued by DHS, to prove your age.
Identity: SSA must see a document other than your birth certificate that shows the name you want on
your Social Security card. They prefer a recently issued document with a photograph, such as a document
issued by DHS. A list of acceptable “second” documents showing proof of identity is provided below.
Immigration status: SSA will need to see the DHS document I-94, Arrival/Departure Record, issued to
you when you arrived in the United States showing your lawful immigration status.
Eligibility to work: For most foreign workers, SSA only needs to see your I-94, Arrival/Departure
Record. If you are an exchange visitor, you must provide also your IAP-66, or DS-2019, Certificate of
Eligibility for Exchange Visitor (J-l) Status. (If you are in the United States as a student or an
international visitor, you will also need an original, signed letter from Asu as your sponsor showing
that you are authorized to work.)
LIST OF ACCEPTABLE DOCUMENTS SHOWING PROOF OF IDENTITY:
- Driver's license
- U.S. Government or State employee ID card
- Clinic, doctor, or hospital records
- Military records
- Your passport
- Court order for name change
- School ID card, record, or report card
- Adoption records
- Church membership or confirmation record (if not used as evidence of age)
- Marriage or divorce record
- Health insurance card
- Insurance policy
Remember, the Social Security Officer must see original or
certified copies of these documents, not photocopies.
If you have difficulty obtaining the social security card, ask for
the name and telephone number of the Social Security employee and
then seek advice from one of the ASU offices listed in Appendix I.
Appendix 2: IRS Forms and Publications
Copies of the following IRS forms and publications, as of July 31,2003, are
available from the university offices noted in Appendix 1 or at the web address indicated.
Form Number Form Name
Form W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding
Instructions for Form W-8BEN
Form 8233 Exemption from Withholding on Compensation for Independent
Personal Services of Nonresident Alien Individual
Instructions for Form 8233
Form W-4 Employee's Withholding Allowance Certificate
Form W-7 Application for IRS Individual Taxpayer Identification Number
Copies of the following IRS forms and publications, as of July 31,2003, are available from the IRS at http://www.irs.gov/formspubs/index.html.
Form Number Form Name
Form 1040C U.S. Departing Alien Income Tax Return
Form 1040NR U.S. Nonresident Alien Income Tax Return
Form 1042-S Foreign Person's U.S. Source Income Subject to Withholding (will be provided to you by ASU)
Form 2063 U.S. Departing Alien Income Tax Statement (Certificate of Compliance)
Additional information is contained in the following IRS publications:
Publication 513 Tax Information for Visitors to the U.S.
Publication 515 Withholding of Tax on Nonresident Aliens
Publication 519 U.S. Tax Guide for Aliens
Publication 901 U.S. Tax Treaties
Limited quantities of certain forms are available in the
university offices listed in this guide. All IRS publications may be
ordered from the IRS Form Distribution Center at the following
address and telephone number:
Internal Revenue Service
Forms Distribution Center
P.O. Box 23289
Richmond, VA 23260
Telephone: 1-800-829-3676
In addition, Publications can be loaded directly from the IRS
website at http://www.irs.gov/formspubs/index.html
Appendix 3: Nonresident Forms Processing Flowchart
This chart summarizes the NRA related forms and documentation required in addition to the standard ASU payment processing forms.
|
TYPE OF PAYMENT
|
TAX FORM REQUIRED
|
ADDITIONAL FORM
|
TAX FORM ISSUED
|
TAX STATUS
|
| EMPLOYEE
|
W-4 (S-1) if wages not exempt under tax treaty,
substitute 8233 affidavit if wages exempt under tax
treaty
|
I-9 documentation required
| 1042-S if exempt under tax treaty; W-2 if
wages not exempt under tax treaty
| Graduated withholding rates if wages NOT exempt
under tax treaty; Visa status dictates FICA taxation
|
| FELLOWSHIP AND SCHOLARSHIP (Students)
| W-8BEN and foreign home address
| Alien Data Collection form; copy of fellowship or schlolarship award notice
| 1042-S
| 14% if award is (a) NOT exempt under tax treaty
or (b) is NOT used for tuition, books, required fees & materials NO FICA
|
| GRANT PARTICIPANTS
|
W-8BEN and Foreign Home Address
| Alien Data Collection Form; copy of grant award notice
| 1042-S
|
14% if award is (a) NOT exempt under tax treaty
or (b) is NOT used for tuition, books, required fees
& materials NO FICA
|
|
INDEPENDENT CONTRACTOR (including Guest Lecturer)
|
8233 if payment exempt under tax treaty
| Alien Data Collection Form; compliance statement; copies of passport, I-94
|
1042-S
|
30% if payment is NOT exempt under tax treaty; NO
FICA
|
|
ROYALTY PAYMENTS
|
W-8BEN and foreign home address
| Explanatory documentation
| 1042-S
| Various Rates per IRS royalty tax table; 30% if NOT listed; NO FICA
|
|
TRAVEL EXPENSES
| None
| Original receipts
| None
| Not taxable if travel reimbursement guidelines are followed
|
Appendix 4: ASU forms and other documents
The following are links to Adobe Acrobat PDF files. You must have
adobe acrobat to read these files. To get a copy of adobe acrobat go to http://www.adobe.com
Alien Data Collection Form (FIN 421-01)
Departmental Professional Services Order Form (FIN 421-04)
Guest Lecturers, Consultants, and Other Independent Contractors Reimbursement Form (FIN 421-01)
Compliance Statement for Payments to Visitors In Business or Tourist Status
For an application form for an Exchange Visitor J-1 Visa or a sample letter of invitation to a nonresident alien
for purposes of securing a B-1 Business visa please contact International Programs Office at (480) 965-5965.
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