Bryn Mawr College

Policies And Procedures For Compensation Payments Made To

Nonresident Alien Independent Contractors And Other Visitors

 

Nonresident alien independent contractors and other visitors, who come to the College for a brief visit and are paid compensation for performing independent personal services, including honoraria, are subject to various federal government regulations.  It is imperative that the College complies with these regulations in order to maintain our tax status and avoid costly fines and penalties.

 

A nonresident alien is an individual who is not a U.S. citizen or a resident alien.  For U.S. tax purposes a resident alien is a lawful permanent resident in the U.S. and holds a “green card” or Form I-551 or meets the Substantial Presence Test for the calendar year.  Please refer to IRS Publication 519, US Tax Guide for Aliens to determine whether for income tax purposes, you are a nonresident or resident alien.

 

In order to receive payment for an honorarium or for performing independent personal services, a nonresident alien is required to:

 

1)       Provide a U.S. tax identification number (ITIN) or a U.S. Social Security Number (SSN).  The Social Security Administration (SSA) issues social security numbers to aliens who have been lawfully admitted for U.S. employment (see chart).  The IRS will issue an ITIN to a nonresident alien who is not eligible for a SSN.

2)       Complete a Form W-8BEN to establish foreign status.

3)       Provide evidence of visitor’s current U.S. immigration status, including, but not limited to the following:

·         a copy of passport identification page;

·         a copy of Form I-94 (front and back) or I-94 W;

·         a copy of Form DS-2019;

·         a copy of Employment Authorization document.

 

If a nonresident alien needs to apply for a SSN they must complete Form SS-5 (Contact: SSA @ www.ssa.gov or @ 1-800-772-1213). If an ITIN is needed they must complete Form W-7 (Contact: IRS @ www.irs.gov or @ 1-800-829-1040).

 

Compensation payments made to nonresident aliens for an honorarium or for performing independent personal services will be taxed at a standard rate of 30% Federal Withholding Tax (FWT) per IRS regulations and will be reported on Form 1042-S. 

 

Tax treaty benefits to exempt compensation payments from tax under an income tax treaty will not be applicable.  Please note that this does not prevent the nonresident alien from claiming tax treaty benefits for compensation payments when filing his/her U.S. income tax return.

 

The Accounts Payable Department processes travel/living expense reimbursements that are excludable under our “accountable plan” rules.  Original receipts are required. These documented travel reimbursements made under our “accountable plan” are not reported to the IRS.

 

Travel grants, reimbursements, and/or payments that are made concerning a non-service scholarship or fellowship are not excludable under the “accountable plan”.  These types of payments are considered income and would need to be processed by the Payroll Department.  These types of payments will be taxed accordingly and reported on Form 1042-S.

 

If you need additional information or assistance with compensation payments made to nonresident alien independent contractors/visitors, please contact Christine Eigenbrot or Leighona Curry in the Comptroller’s Office.

 

Please contact MaryEllen Gardner in the Comptroller’s Office if you need assistance with travel reimbursements made under our “accountable plan”.

 

Should you require additional information or assistance in reference to the appropriate visa type and status for a visitor, please contact Li-Chen Chin or Pattie Lausch in the Office of International Programs at x7390.

 

Links to Forms and Publications:

IRS Publication 519 - US Tax Guide for Aliens (Substantial Presence Test): http://www.irs.gov/pub/irs-pdf/p519.pdf

IRS Form W-8BEN: (http://www.irs.gov/pub/irs-pdf/fw8ben.pdf)

SS-5: http://www.irs.gov/pub/irs-pdf/fss5.pdf

W-7: http://www.irs.gov/pub/irs-pdf/fw7.pdf