1-23 Payments to Nonresident Alien Independent Contractors, Guest Speakers and Performers
Responsible Officer: Vice President for Business Affairs and Controller
Sponsoring Department: Payroll Services
Revision Date: 19 November 2009
Errors or changes to: netsolutions@uta.edu
Procedure Objective
This procedure provides instructions for processing payments to nonresident alien independent contractors, guest speakers and performers.
Rationale
Attached to the privilege of hosting international persons is the responsibility of complying with the complex rules of both the Internal Revenue Service (IRS) and the U.S. Citizenship and Immigration Service (USCIS). Because of the complexity of these external requirements, it may take up to six months to obtain the proper travel documents, appropriate visas, tax identification numbers, and tax treaty exemptions. Payroll Services recommends that in addition to following this procedure, a department who plans to make a payment to an international guest contact Payroll Services at 25426 for payment procedures and necessary tax documents.
Scope
All departments planning to pay an international guest who is a nonresident alien.
Website Address For This Procedure
Contacts
If you have any questions about UT Arlington Fiscal Procedure 1-23, Payments to Nonresident Alien Independent Contractors, Guest Speakers and Performers, please contact the following departments:
| Subject | Office Name | Telephone Number | Email/URL |
|---|---|---|---|
| All topics in Procedure | Payroll Services | (817) 272-5426 | http://www.uta.edu/policy/business-affairs/payroll |
| Website access | Net Solutions | (817) 272-0222 |
netsolutions@uta.edu http://policy.uta.edu/net_solutions |
Definitions
Nonresident Alien - a person who is not a U.S. citizen or a lawful U.S. permanent resident.
Responsibilities
N/A
Procedures
Section I. Payments for Professional Services Procedure
Please reference Fiscal Procedure 1-19, Payments for Professional Services, Section VII, Payments to Independent Contractors for additional procedural information.
NOTE: Visitors on H1B status with another university or entity cannot be paid for services from anyone other than the employer who sponsored the H1B status. That includes a stipend, honorarium or salary. An H1B may receive only transportation and reasonable, incidental living expenses in order to give speeches, lectures, etc.
Section II. Additional Documents
In addition to the requirements of Fiscal Procedure 1-19, the international independent contractor must present the following documents:
A copy of the I-94 must be attached to the Payee Information Form, Exhibit 1-9
All payments to an international independent contractor are taxed at 30% unless a Form 8233 to claim a tax treaty exemption from withholding is submitted to Payroll Services prior to the time payment is made. The payee must have a Social Security Number or an Individual Taxpayer Identification Number to apply a tax treaty exemption.
If the international independent contractor is claiming a tax treaty exemption, they must complete the GLACIER online tax program to verify eligibility and provide the tax forms necessary to apply the tax treaty exemption. Email prf@uta.edu with the payee’s full name, email address, immigration status (F1, J1, H1B, etc.) to request a GLACIER password. GLACIER access information will be emailed to the individual.
Section III. Foreign Source Income
If a nonresident alien earns income from the performance of personal services, the income is sourced in the country where the services are rendered. In determining the source of any compensation, the residence or nationality of the payor of the compensation is irrelevant, as is the place and time of payment. Therefore, payments made by the University to nonresident aliens performing services outside the U.S. are considered "Foreign Source Income" and not subject to U.S. tax. Likewise, the individual receiving payment is not required to have an ITIN. UT Arlington may pay that individual under a temporary identification number. Some countries are restricted and payments cannot be issued to persons present in these countries. For a list of sanctioned countries please visit http://www.ustreas.gov/offices/enforcement/ofac/programs/.
Section IV. Completing a U.S. Tax Return with the Internal Revenue Service
The independent contractor must complete a tax return and mail to the Internal Revenue Service of the U.S. Government. Income taxes in the U.S. are based on a calendar year beginning January 1 through December 31. Tax returns are completed and mailed the following year by April 15 if the contractor is still in the U.S. If the contractor is residing out of the U.S., the deadline for mailing is June 15.
Payments to international independent contractors are reported on a Form 1042S. Form 1042S will be issued by Payroll Services before March 15 of the following year after the payment was made. This form reports the amount of payment and the taxes withheld or the amount exempted if a tax treaty exemption was applied.
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Payroll Services has purchased tax software for nonresident aliens called CINTAX - Complete International Tax Preparation. This software is successful at assisting the majority of UT Arlington international payees with preparing the necessary forms. UT Arlington provides this software at no cost to the payee. It is usually available in mid-February through June 15.
If the payee applied a tax treaty exemption and has a GLACIER record, they may access CINTAX through the GLACIER program using their GLACIER User ID and password.
If the payee does not have a GLACIER record, they may request a password for CINTAX by emailing prf@uta.edu. Please include full name, department receiving service and type of service.
Section V. Reimbursements for Travel Expenses
Please contact the Travel Desk in Accounting and Business Services at 817-272-7100 or 817-272-2298 or visit http://www.uta.edu/policy/procedures/2-87