Payments to Nonresident Aliens

Payments to nonresident aliens generally are subject to income tax withholding of 30 percent unless the foreign national is eligible to receive a tax treaty benefit, which is explained below. Departments must ensure (before inviting or otherwise agreeing to pay a non-U.S. citizen) that the individual is or will be present in the U.S. under a VISA classification eligible to legally receive payment.

View a chart of common VISA status and payment eligibility (PDF)

Type of Payment

The following payment types are subject to U.S. withholding and reporting.

  • Compensation for Independent Personal Service: includes professional service, consulting fee, honoraria for a lecture, presentation, speaker.
  • Scholarship/Fellowship/Grant: no service required, independent educational activity (stipend, per diem/living allowance, travel payment)
  • Royalty: includes passive income for use of intangible goods
  • Prizes and Awards: no service require

Explanation of Nonresident Alien Payment Types (DOC)

Income Tax Treaties

The U.S. has an agreement with many countries to exempt income tax withholding on compensation payments for Independent Personal Services to nonresident alien individuals and noncompensatory scholarships, fellowships, grants to nonresident alien individuals and to tax at a reduced rate royalty payments. Other income, such as prizes and awards, is not exempt under an income tax treaty.

In order to take advantage of a tax treaty benefit, the department preparing a check request can contact the university tax department to see if there is an agreement between the U.S. and the country of residence of the non resident alien payee.

There are two IRS forms related to nonresident aliens and one related to foreign entity, based on the type of income earned:

Form 8233 (Editable PDF) (Form Number 8233 Instruction Sheet Rev. March 2009 PDF)
For independent compensation payments, no attachment necessary. Submit original with signature via mail to the tax department at: Tax Department, Room 2W, 33 Knightsbridge Rd, Off Campus, Piscataway, NJ 08854. See identification requirements below.

Form W-8Ben (Editable PDF) (Instructions for W-8Ben Form PDF)
For scholarship/fellowship grants, royalty payments, and also used to certify non-U.S. person/entity. Submit the original with signature to:  Tax Department, Room 2W, 33 Knightsbridge Rd, Off Campus, Piscataway, NJ 08854. See identification requirements below.
 

W-8Ben-E Form (Editable PDF) (Instructions for W-8Ben-E Form PDF)
Request a completed W-8BEN-E form from a foreign entity when making a payment. This form is used to certify the entity’s foreign status. It is also used to validate a tax treaty exemption from, or a reduced rate of, withholding on copyright, royalty, software license, patent payments and scholarship/fellowship payments. View additional guidelines (PDF) for completing this form.

Identification Requirements

In order to claim the withholding exemptions on IRS Form 8233 or Form W-8BEN, nonresident aliens are required to provide a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) when completing these forms. If eligible, the nonresident alien can obtain a Social Security Number by contacting the Social Security Administration. If not eligible for a Social Security Number, applicants, may be eligible for an Individual Taxpayer Identification Number (ITIN). To apply, complete:

Form W-7 (Editable PDF)
Instructions for completing the W-7 (PDF)
For nonresident aliens who are in the United States for a short period of time, and who are not eligible for a Social Security Number.