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Paying International Visitors. Kristina Sparks, FMS-Tax Lynn Schoch, International Services. Once upon a time. Tax Audit. . And they all lived happily(?) every after. Paying International Visitors. Before the visit Figure out the right visa type (OIS) During the visit

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paying international visitors

Paying International Visitors

Kristina Sparks, FMS-Tax

Lynn Schoch, International Services

slide5

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)
before the visit
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.

before the visit talk to ois
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

before the visit1
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)

before the visit2
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.

before the visit3
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
no longer required for payment
No Longer Required for Payment

B-1/B-2 compliance form

no longer required for payment1
No Longer Required for Payment

H-1B Travel Reimbursement approval

no longer required for payment2

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

during the visit documents and signatures5
During the Visitdocuments and signatures

ITQ

Compensation for services or fellowship

during the visit documents and signatures6
During the Visitdocuments and signatures

W-7

When no SSN; must have interview with OIS staff.

during the visit documents and signatures7
During the Visitdocuments and signatures

8233

Honorarium

with treaty benefits, or

W-7

(follow-up form prepared by FMS-Tax)

after the visit
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?
after the visit1
After the Visit

Do we have what we need to

make a payment?

  • Documentation ~ Tax status
  • Purpose ~ Classification of income
  • Activity location ~ Income sourcing
after the visit2
After the Visit

Documentation ~ Tax status

  • Establish tax status in U.S.
  • Determine eligibility for tax treaty benefits
  • Notify visitor of limitations
after the visit3
After the Visit

Purpose ~ Classification of income

  • Independent Contractor Services
  • Scholarship or Fellowship
  • Travel
  • Royalty
after the visit4
After the Visit

Activity Location ~ Income Sourcing

  • Location where services performed
  • Location of funding
  • Location of activity
after the visit5
After the Visit

How much has to be withheld?

  • Documentation ~ Tax status
  • Purpose ~ Classification of income
  • Activity location ~ Income sourcing
  • Tax Treaty
after the visit6
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
after the visit7
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
after the visit8
After the Visit

Purpose ~ Classification of income

  • Independent Contractor Services – 30%
  • Scholarship or Fellowship – 33.4%, 17.4%
  • Travel – 0% *
  • Royalty – 30%
after the visit9
After the Visit

Activity location ~ Income sourcing

  • U.S. Sourced
    • Withholding occurs unless exception applies
  • Foreign Sourced
    • No withholding
after the visit10
After the Visit

Tax Treaty

  • Requirements of treaty article
  • U.S. Tax ID or application
  • Additional documentation necessary
  • Signed documentation
after the visit11
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.
after the visit12
After the Visit

Payment Process

  • Possible Outcomes
    • Not reportable income
    • Reportable income
      • Foreign Sourced
      • Tax Treaty
      • Withhold taxes
      • Department gross-up
after the visit talk to fms tax
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

paying short term visitors a work in progress
Paying Short-Term Visitors:A work in progress
  • Liability of payee
  • Liability of payor
  • Systemic abuse
paying short term visitors a work in progress1
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