The following terms are related to paying foreign national visitors and independent contractors for activities performed IN the United States:
DHS (Department of Homeland Security) – U.S. federal government cabinet whose missions include preventing terrorism and enhancing security; managing our borders; administering immigration laws; securing cyberspace; and ensuring disaster resilience.
EIN (Employer Identification Number) – issued by the Internal Revenue Service to business entities (Form SS-4).
Employment Authorization – permission to perform services. Not all immigration classifications are eligible for U.S. employment authorization. If a service is going to be provided, or an activity is going to occur, and a foreign national will be compensated , reimbursed, gifted, or otherwise paid for their participation, you must identify their visa classification, and if necessary, their employment authorization document. (Consult with the Foreign National Tax Office for advice).
ESTA (Electronic System for Travel Authorization) – an automated system that determines the eligibility of visitors to travel to the U.S. under the Visa Waiver Program (VWP). Authorization via ESTA does not determine whether a traveler is admissible to the United States. U.S. Customs and Border Protection officers determine admissibility upon travelers’ arrival. ESTA website.
Fellowship – a fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. (IRS Publication 970, p. 4-5)
Foreign Person – nonresident alien individual, foreign corporation, foreign partnership, foreign trust, a foreign estate, and any other person that is not a U.S. person.
Foreign National – a person who is not a citizen of the host country (United States) in which he or she is temporarily residing or visiting.
FNIF [Foreign National Information Form (for Honoraria and Other Payments to Non-Employee Foreign Nationals)] – a form that collects detailed U.S. immigration activity in order to verify tax residency
Honorarium – type of payment 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 to a lecturer or another expert for sharing expert information; an honorarium is taxable compensation under U.S. tax law.
Honorarium Exception – a provision of law the permits nonimmigrant visitors, in B status or on a visa waiver, to engage in usual academic activities under certain conditions. This is subject to the 9-5-6 Rule.
ITIN (Individual Taxpayer Identification Number) – issued by the Internal Revenue Service to certain foreign national taxpayers who are not eligible for SSNs (Form W-7).
Living Allowance – Payments made to visiting students, researchers, and scholars to help defray their cost for room/housing, board/meals, travel and incidentals when no services are performed by the visitor. The IRS defines these payments as taxable non-qualified scholarships/fellowships and grants.
NEXUS Card (a Trusted Traveler Program) – identification card that replaces the passport for preapproved low-risk Canadian citizens crossing the U.S./Canada border.
Nonresident Alien – an individual who is not a U.S. citizen or a resident alien. See Resident Alien.
Passport Card – identification card that replaces the passport for land and sea travelers at the U.S./Canada and U.S./Mexico borders.
Pre-approval Letter – a letter from the Responsible Officer overseeing a non-Pitt sponsored
J visitor’s program* which states the following:
- The activity that the J-1 will engage in at Pitt
- The dates of the activity,
- The activity is directly related to the objectives of the J-1 Exchange Visitor’s program,
- Is incidental to the J-1 Exchange Visitor’s primary program activities,
- Will not delay the completion date of the J-1 Exchange Visitor’s primary program, and
- Has been documented in SEVIS.
*Non-Pitt F-1 students without an EAD only require a note from the International Services office of their sponsoring institution stating that they approve the activity.
Prize/Award – payment as a reward or recognition for a special achievement, skill, or knowledge, or as winnings from a contest Prizes/awards are not intended to be used for a particular purpose. Recipients can use the amount as they see fit.
Resident Alien – an individual that is not a citizen or national of the United States and who meets either the (1) Green Card test or the (2) Substantial Presence Test for the calendar year.
(1) Green Card Test - You are a resident for tax purposes if you are a lawful permanent resident of the United States at any time during calendar year.
(2) Substantial Presence Test*- You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for the current calendar year. To meet this test, you must be physically present in the United States on at least:
- 31 days during current year, and
- 183 days during the 3-year period that includes the current year and the two previous years, counting:
- All the days you were present in the current year, and
- 1/3 of the days you were present in the previous calendar year, and
- 1/6 of the days you were present in the next previous calendar year.
The Foreign National Tax Office can help you determine if you have substantial U.S. presence. To utilize this service, email us: ForeignNationalTaxOffice@cfo.pitt.edu.
*In general, F-1 visa holders are exempt from counting their days present for their first five calendars years in the United States, and J-1 visa holders are exempt from counting their days present for their first two calendar years in the U.S. For detailed information regarding these exemptions and additional factors for consideration in determining your residency status, please consult the following:
- IRS Residency Status Decision Tree https://apps.irs.gov/app/vita/content/globalmedia/determining_residency_status_decision_tree_4012.pdf
- IRS Publication 519, U.S. Tax Guide for Aliens https://www.irs.gov/pub/irs-pdf/p519.pdf
Responsible Officer (RO) – appointed by the J-1 exchange program sponsor to administer the program according to the regulations and to represent the sponsor to the U. S. government. Program administration refers to the daily operation of the program and includes selecting participants, providing pre-arrival and orientation information to participants, issuing Form DS-2019, overseeing the general activities of the participants, communicating with the U. S. Department of State, and maintaining records on the program.
Royalty – payment for the use of intellectual property owned by the payee; e.g., copyright, patent, trade secret or trademark.
Scholarship – a scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies. (IRS Publication 970, p. 4-5)
Self-Employment – a situation in which an individual works for himself, instead of working for an employer that pays a salary or a wage; foreign nationals must have unrestricted employment authorization to engage in self-employment.
SENTRI Card (Secure Electronic Network for Travelers Rapid Inspection) – identification card that replaces the passport for preapproved low-risk land travelers crossing the U.S./Mexican border.
SSN (Social Security Number) – issued by the Social Security Administration to foreign national taxpayers only if they are authorized for employment in the U.S. (Form SS-5).
Substantial Presence – when a foreign national has enough countable days to be determined a U.S. tax resident.
Tax Residency – residency for taxation purposes.
TINs – Taxpayer Identification Numbers (i.e., SSNs, ITINs, and EINs).
Travel Grant – a taxable monetary supplement provided to visiting scholars, researchers, and students to defray their travel and living expenses.
Unauthorized Services – services provided by a foreign national who does not possess proper employment authorization.
USCIS (United States Citizenship and Immigration Services) – the government agency that oversees lawful immigration to the United States.
U.S. Person – a resident of the U.S.; includes U.S. Citizens, Permanent Residents, and Resident Aliens (Substantial Presence).
Visitors – foreign nationals who enter the U.S. as visitors for business or pleasure (tourists). This is the only group permitted to receive honoraria.
W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding) IRS form to be completed by all foreign individuals receiving payment from a U.S. payer. It is also used to claim treaty benefits for scholarships/fellowships and prizes/awards. See https://www.irs.gov/pub/irs-pdf/fw8ben.pdf
Other forms in the W-8 series include:
- W-8BEN-E for foreign entities – see https://www.irs.gov/pub/irs-pdf/fw8bene.pdf
- W-8ECI – for claims of income effectively connected with a US trade or business – see https://www.irs.gov/pub/irs-pdf/fw8eci.pdf
W-9 (Request for Taxpayer Identification Number and Certification) – IRS form to be completed by all U.S. persons receiving payments from a U.S. payer. See this page for the current version of an IRS W-9: https://www.irs.gov/uac/Form-W-9,-Request-for-Taxpayer-Identification-Number-and-Certification
8233 (Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual) – IRS form to be completed by any foreign person wishing to claim tax treaty benefits on independent personal services (e.g., self-employment and honoraria) and certain dependent personal services (e.g., Wages).
See this page for the current version of an IRS 8233: https://www.irs.gov/uac/Form-8233-Exemption-From-Withholding-on-Compensation-for-Independent-and-Certain-Dependent-Personal-Services-of-a-Nonresident-Alien-Individual
9-5-6 Rule - Honoraria payments made to B1/B2 visitors are subject to the 9-5-6 rule: The activity will not last longer than NINE days; and the visitor will not have accepted such payment or expenses from more than FIVE institutions or organizations in the past SIX months. Honoraria-type activities performed by visitors in any class other than B1/B2, are subject to the restrictions of the individual’s visa classification.