Nonresident Alien Tax Manual
All payments are subject to federal income tax withholding UNLESS they are specifically exempted by either U.S tax law or an Income Tax Treaty. Note: At present, there are tax treaties with 55 countries, each of which is unique.
In addition, most payments made to or on behalf of a nonresident alien (whether taxable or NOT) must be reported to the Internal Revenue Service (IRS).
- Form 1042S is the annual tax form that is used to report such payments and tax withholding. The University must issue the form to the IRS and the nonresident alien no later than March 15th.
- A nonresident alien may also, in some situations, receive Form W-2, which must be issued by the University no later than January 31st.
Examples of reportable payments made to nonresident aliens include, but are NOT limited to: - Wages, Salaries, or Compensation
- Fellowship Stipends
- Independent Contractor Payments
- Consultant Payments
- Honoraria or Guest Speaker Fees
- Taxable Scholarships/Financial Aid
- Some Travel Reimbursements
- Living Allowances
- Prizes and/or Awards
- Royalties
Note: Payments do not have to be paid in cash; credits to student’s account qualify under these requirements.
If a nonresident alien is exempt from federal income tax withholding because of an income tax treaty, the individual must file the appropriate form to claim the exemption. Fordham may exempt the individual from U.S. tax withholding, only if the individual (a) completes either Form W-8BEN or Form 8233 (b) or has applied for a U.S issued social security or individual taxpayer identification number. The appropriate form should be completed after “analysis” of person at Nonresident Alien interview.
Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding) Form W-8BEN is used to claim a tax treaty exemption for royalties, scholarships, fellowships, grants and stipends that do not require the performance of a service. Form W-8BEN is valid for a period of three calendar years if the individual provides his or her social security number or ITIN. If no social security number or ITIN is provided, the form is valid for one calendar year. Fordham is required to collect Form W-8BEN prior to making the first payment to the individual for which he or she is claiming tax treaty exemption.
Depending on the type of payment, the required federal income tax withholding is set at a rate of:
- 14 percent
- 30 percent
- Graduated withholding rates