Alert

See latest COVID-19 impacts related to Purchasing, Payments & Travel

Paying Foreign National Visitors & Independent Contractors for Activities Performed Inside the U.S.

The following information pertains to paying foreign national visitors or independent contractors (not corporations) who are in non-resident alien status for activities performed INSIDE the United States. U.S. tax and other laws and international treaties can complicate payments to foreign nationals. This guide is intended to simplify the process.

Examples of common payments the University makes to foreign nationals visiting or working in the U.S:
  • Honoraria, which are paid to foreign national visitors who come to share knowledge by presenting a lecture, serving as a contest judge, participating in a panel, meeting series or other similar activities.
  • Expense reimbursements, which are paid to visitors such as faculty candidates, student recruits, and individuals performing honoraria type activities to cover expenses incurred while traveling on University business, while engaged in University business, or in connection with an honoraria-type activity.
  • Payments types such as travel grants or Living Allowances made to visiting scholars, students, and researchers to defray their expenses while visiting the University of Pittsburgh.      
  • Independent contractor payments, which are for professional services performed in the U.S.
  • Prizes and Awards, which when paid to non-U.S. persons are subject to tax withholding when the payer resides in the U.S.

Please note, this guide DOES NOT pertain if the payee is:

  • A U.S. resident alien. In this case, follow procedures for U.S. citizens.
  • A foreign national independent contractor or corporation that has performed services OUTSIDE the United States. Information on this topic is located here.
  • An EMPLOYEE. Information on this topic is located on the Payroll Department's website.

Step 1: Can we legally pay?

Check before inviting or contracting with a foreign national.

Occasionally, the University cannot legally pay the visitor or independent contractor. Here are some things to check prior to making a formal invitation or contracting for professional services.

  • Is the visitor or contractor from an embargoed country, OR will special licenses be required for the U.S. activity in which they will be engaged? Check here.
    • U.S. law requires screening ALL payments to foreign national individuals against restricted party lists. You may check prior to your visitor or contractor's arrival here. It is very rare that Pitt payees do not pass this screening, and therefore, you may wait for the PantherExpress team to do this for you just prior to payment. However, please be advised that there is a small chance that payment may be delayed or denied if you wait for the PantherExpress team to screen just before payment.
  • Make sure that your visitor or independent contractor can enter the U.S. with the correct VISA for the Pitt activity, or we may not be permitted to pay. View the Visitor Visa Chart for assistance. 

Step 2: If we CAN legally pay

In order to avoid surprises and to ensure that the process goes smoothly, we recommend that you review the options and discuss them with your visitor WELL BEFORE ARRIVAL.

The IRS requires a flat 30% withholding on ALL types of payments to foreign national individuals UNLESS:

  • The individual has a U.S. tax identification number (SSN or ITIN) and qualifies for a tax reduction under the tax treaty between the U.S. and their country of tax residency. You can find more information about applying for an SSN here and ITIN here. If you have any additional questions about the tax treaty process, we are here to help; or
  • The payment type is a travel or business expense that is substantiated as required by the University’s Travel and Business Expenses Policy FN 28; or
  • The payee is receiving a travel grant or living allowances and arrived in the US on a J-1 or F-1 Visa.  In these cases the tax rate will be 14% unless number 1 or 2 applies.

Your payee has options…

In order to reduce the occurrence of double-taxation for foreign nationals (taxed in U.S. and possibly taxed in their home country), the U.S. government has negotiated individual tax treaties with many countries. List of countries with tax treaty agreements with the US.

Under IRS regulations, if they wish, foreign nationals have the responsibility to apply for a reduction in U.S. tax withholding. The amount of tax withholding reduction (called a treaty benefit) depends on each country's negotiated tax treaty with the U.S. The University understands that the IRS's application process can be daunting for visitors and independent contractors who are not familiar with U.S. tax law, or for whom English is a second language.

The University provides free professional assistance in completing the application and has acquired special software to help its visitors and independent contractors understand the requirements under U.S. tax treaties.

Making Payments

This is what you will need (by payment type) to pay a foreign national who wishes to apply for a tax withholding reduction:

Honoraria (including unsubstantiated travel and business expenses)

For U.S. dollar check payments* submit the following through Concur (see instructions on pages 84-87 of the Travel and Expense Management Guide):

  1. A completed W8 (a copy is acceptable)
  2. A description of the event
    • If services are performed outside the United States, please notate.
  3. (Optional) If your visitor has a social security number or ITIN, you can submit a completed Foreign National Information Form to apply for a tax treaty. If a tax withholding reduction is granted, the Foreign National Tax Office will provide a completed 8233 that must be signed by the individual.

Please review the 9-5-6 rule for honoraria paid to visitors in B1, B2, VWB, or VWT status

*Foreign national service providers working in the US generally accept a US dollar check. In the rare case that a wire transfer or foreign currency check payment is required, please see this page for instructions.

Travel Grants and Living Allowances

Submit the following through Concur (see instructions on pages 84-87 of the Travel and Expense Management Guide):

  1. A completed W8 (a copy is acceptable)
  2. Supporting documentation (justification/ purpose/ reason for visit)
    • If your visitor does not have a social security number or ITIN, but are F or J visa holders, tax withholding is reduced to 14%. Please notate in your supporting documentation if a visitor is on an F or J visa.
  3. (Optional) If your visitor has a social security number or ITIN, you can submit a completed Foreign National Information Form to apply for a tax treaty.
Expense reimbursements:

Expenses that do not adhere to Policy FN 28 are subject to federal tax withholding. Short-term expense reimbursement are processed the same as Travel Grants and Living Allowances. Submit the following through Concur (see instructions on pages 84-87 of the Travel and Expense Management Guide):

  1. A completed W8 (a copy is acceptable)
  2. Supporting documentation (justification/ purpose/ reason for visit)
  3. (Optional) If your visitor has a social security number or ITIN, you can submit a completed Foreign National Information Form to apply for a tax treaty.

Independent contractor payments for professional services

Services Agreements must be reviewed by the Purchasing Services Department. Follow the instructions on this page.
Prizes or Award Expense Type

For U.S. dollar check payments* submit the following through Concur (see instructions on pages 84-87 of the Travel and Expense Management Guide):

  1. A completed W8 (a copy is acceptable)
  2. Supporting documentation (justification/ purpose/ reason for visit)
  3. (Optional) If your visitor has a social security number or ITIN, you can submit a completed Foreign National Information Form to apply for a tax treaty.

*Foreign national service providers working in the US generally accept a US dollar check. In the rare case that a wire transfer or foreign currency check payment is required, please see this page for instructions.

Glossary

Visit this page for a glossary of terms related to paying foreign national visitors and independent contractors.