Foreign National (Nonresident Alien)
The university interacts with international visitors from all over the world who are involved in various services and activities for the university. Often times it is appropriate to provide visitors with travel reimbursements, honorariums and other payments. To process these payments, Carnegie Mellon is required to obtain and follow certain procedures to comply with IRS rules and regulations.
Resident Alien (U.S. National)
An individual who is not a U.S. citizen, but is a lawful permanent resident or meets the substantial presence test for the calendar year. Taxation determines who is a resident alien based on information provided on the Foreign National Information Form for Non-Employees [.pdf].
Nonresident Alien
An alien is any individual who is not a U.S. citizen or U.S. national. A nonresident alien is an alien who has not passed the green card test or the substantial presence test. A resident of a foreign country under the residency article of an income tax treaty is a nonresident alien individual for withholding purposes.
Non-Payroll Payments
All payments made to or on behalf of foreign nationals (nonresident aliens) generally are subject to income tax withholding unless they are specifically exempted under an income tax treaty between the United States and the home country of the foreign national. The rate of withholding varies depending on the type of payment and the applicability of any tax treaty provisions.
All non-payroll payments made through Accounts Payable will be analyzed to determine appropriate tax withholding treatment. This is done by having the foreign nationals complete the Foreign National Information Form [.pdf]. The information is then processed by the Foreign National Tax System, known as Windstar.
In general, the IRS regulations state that 30 percent tax is withheld from payments made to foreign nationals, unless a tax treaty exists. If a tax treaty exists between the United States and the individual’s home country, the tax rate may potentially decrease to 14 percent or the individual may be eligible to claim an exemption from U.S. income tax withholding (zero percent).
For any payments to foreign nationals, the individual is required to complete one of the following forms:
Please note that a tax treaty benefit cannot be granted unless the foreign national individual has a U.S. Social Security Number.
Examples of non-payroll payments include, but are not limited to:
- Stipends
- Non-employee prizes/awards
- Honorariums
- Royalties
- Fees for services
- Payments to participate in human subject research
- Travel reimbursements
Form W-8BEN
Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding
- Used for payments of nonqualified scholarships, royalty payments, prizes and awards (i.e., non-compensatory payments).
- W-8BEN is retained in the tax files in the event of an IRS audit.
Form 8233
Exemption from Withholding on Compensation for Independent Personal Services of Nonresident Alien Individual
- Used for payments of fees for services, honorariums or consultant payments (i.e., compensatory payments).
- Form 8233 is retained in the tax files in the event of an IRS audit.
Form 1042-S
All payments made to or on behalf of foreign national individuals are generally required to be reported to the IRS.
- Annual tax statement used to report most payments and tax withholdings for foreign nationals.
- A copy will be sent to the IRS and to the foreign national individual for their tax records.
Form 1042-NR, U.S. Nonresident Alien Income Tax Return
Non-Resident Aliens of the United States may need to file Form 1040NR if they have received U.S. Sourced Income.
Visit the IRS Form 1040NR website to determine your filing requirements.