ACCOUNTS PAYABLE

Nonresident Alien Payments

Any payment being made to a nonresident alien requires special attention and handling. Below is a summary of the requirements for paying a nonresident alien.

Because of the complicated tax laws and regulations for these payments we strongly request that you review the Nonresident Alien Policy and Procedures Manual and/or call Accounts Payable well in advance of making a payment request. Having the correct documentation will make the process much easier and faster.

• All payments made to or on behalf of a nonresident alien must be reported to the Internal Revenue Service (IRS).
• In addition, all payments are subject to federal income tax withholding unless they are specifically exempted by either U.S. tax law, or by an income tax treaty. (Note, there are tax treaties with over 40 countries, each of which is unique and different.)
• Examples of payments made to nonresident aliens include, but are not limited to:
  • Wages/Compensation Scholarship
  • Stipends Fellowships
  • Independent Contractor Payments Book Allowances
  • Consultant Payments Living Allowances
  • Honoraria Prizes/Awards
  • Travel Reimbursements Royalties/Commissions
  • Note: Payments do not have to be paid in cash; credits to a student's account on ISIS qualify under these requirements.
• Each payment requires the review of certain key factors:
  • Visa Type
  • U.S. Residency Status (U.S. citizen, resident alien, nonresident alien)
  • Substantial Presence Test
• If a nonresident alien is exempt from federal income tax withholding because of either U.S. tax law or a tax treaty, that individual must file the appropriate form:
• Form 8233 - Compensation (independent contractors and employees) and related payments
• Form W-8BEN – Scholarship, fellowship (no service), royalties and other payments
• Payments requiring federal income tax withholding are taxed at 14 percent, 30 percent, or graduated withholding rates depending on the type of payment.
• The 1042S is the annual tax form that is used to report payments and tax withholding to nonresident aliens.
• Temple University is committed to ensuring full compliance with the tax laws. The reporting and taxation requirements of nonresident aliens are very complex. As such, this manual will serve as a guideline for individuals and departments to enable all parties to meet their reporting and taxation requirements.
• Payments for Non-Resident Aliens must never be included on an electronic upload. All original paperwork must be submitted to Accounts Payable.

In order to make a payment to a nonresident alien, the individual must have a US social security number or a US ITIN (the only exception to this is for payments being made that are determined to be part of a "qualified scholarship").