Paying International Visitors

1. Paying International Visitors Kristina Sparks, FMS-Tax Lynn Schoch, International Services

2. Once upon a time . . . Tax Audit

3. . And they all lived happily(?) every after.

5. Paying International Visitors • Before the visit • Figure out the right visa type (OIS) • During the visit • Get documents and signatures. (Dept) • After the visit • Apply tax treaty benefits and complete payment (FMS-Tax)

6. Before the Visit Protect the Visitors – Immigration Issues • How long will they stay? • Will they be paid? • Will they take IU courses? • What countries are they from? Talk to OIS.

7. Before the Visit: Talk to OIS. Scholars Joanna Snyder Assistant Director for Scholar Services snyder1@indiana.edu -------------------------- Students Jenny Bowen Assistant Director for Student Services jabowen@indiana.edu 855-9086

8. Before the Visit • Outside the U.S. • What is the best visa type?* • Already in the U.S. • Will their current visa type work? * Visa type = immigration status as listed on the I-94 card. (F-1, H-1B, WB, B-2)

9. Before the Visit Protect the Visitors – Financial Issues • What kind of payments can we make? • Compensation (honorarium) • Travel • Fellowship (usually taxable) • Royalty • How much tax will they pay? • Possible tax treaty benefits Talk to FMS-Tax.

10. Before the Visit Add-New-Person E-doc (generates UID) • YES: IU-sponsored Visa • J scholars and visitors • NO: Not IU-sponsored Visa • B-1, B-2, WB, WT – business and tourist • Other visitors here less than two weeks

11. No Longer Required for Payment B-1/B-2 compliance form

12. No Longer Required for Payment H-1B Travel Reimbursement approval

13. To protect status, J-1 visitor sponsored by another institution must obtain: • a letter from IU with details of the arrangement • a letter from home department recommending participation • a letter from sponsoring intl advisor noting compliance with regulations. No Longer Required for Payment J-1 Exchange Visitor Authorization for Occasional lectures

14. During the Visit:documents and signatures Cover form Everyone

15. During the Visitdocuments and signatures W-8BEN Everyone

16. During the Visitdocuments and signatures I-94 Everyone

17. During the Visitdocuments and signatures I-797 when presented

18. During the Visitdocuments and signatures DS-2019 J- only

19. During the Visitdocuments and signatures ITQ Compensation for services or fellowship

20. During the Visitdocuments and signatures W-7 When no SSN; must have interview with OIS staff.

21. During the Visitdocuments and signatures 8233 Honorarium with treaty benefits, or W-7 (follow-up form prepared by FMS-Tax)

22. After the Visit Protect the Institution – Payment and Tax Issues • Do we have what we need to make a payment? • How much has to be withheld?

23. After the Visit Do we have what we need to make a payment? • Documentation ~ Tax status • Purpose ~ Classification of income • Activity location ~ Income sourcing

24. After the Visit Documentation ~ Tax status • Establish tax status in U.S. • Determine eligibility for tax treaty benefits • Notify visitor of limitations

25. After the Visit Purpose ~ Classification of income • Independent Contractor Services • Scholarship or Fellowship • Travel • Royalty

26. After the Visit Activity Location ~ Income Sourcing • Location where services performed • Location of funding • Location of activity

27. After the Visit How much has to be withheld? • Documentation ~ Tax status • Purpose ~ Classification of income • Activity location ~ Income sourcing • Tax Treaty

28. After the Visit Documentation ~ Tax status Determined by: • Citizenship or Permanent Residency Status • Substantial Presence Test • Physical days present in the U.S. • Immigration status during each visit • Requires 6 years of visit history

29. After the Visit Documentation ~ Tax status • Nonresident Alien • Withholding at time of payment unless exception applies • Reported on 1042-S • Resident Alien • No withholding at time of payment • Reported on 1099-MISC or self-reported

30. After the Visit Purpose ~ Classification of income • Independent Contractor Services – 30% • Scholarship or Fellowship – 33.4%, 17.4% • Travel – 0% * • Royalty – 30%

31. After the Visit Activity location ~ Income sourcing • U.S. Sourced • Withholding occurs unless exception applies • Foreign Sourced • No withholding

32. After the Visit Tax Treaty • Requirements of treaty article • U.S. Tax ID or application • Additional documentation necessary • Signed documentation

33. After the Visit Payment Process • Create foreign vendor • W-8BEN • Foreign Individual/Entity Certification • Create Payment Request • Forward documentation • FMS-Tax will notify you with any additional documentation requirements.

34. After the Visit Payment Process • Possible Outcomes • Not reportable income • Reportable income • Foreign Sourced • Tax Treaty • Withhold taxes • Department gross-up

35. After the Visit: Talk to FMS-Tax - Tax law -Payment status -Documentation requirements Position Vacancy Tax Compliance Officer taxpayer@indiana.edu 856-5424 -------------------------- Tax Compliance Officers Michael Butcher 856-4534 John Fox 855-7100 Vickie Fry 856-0247

36. Paying Short-Term Visitors:A work in progress • Liability of payee • Liability of payor • Systemic abuse

37. Paying Short-Term Visitors:A work in progress iStart – departmental services • Request for J, H-1B, O visa. • Request for extensions. • Request for permanent residency. • Coming: Request for short-term visitor assistance. https://istart.iu.edu/istart/controllers/admin/AdminEngine.cfm