Payments to Foreign Nationals March 9, 2015
Workshop Presenters Kelly Sellers University Payroll and Benefits Assistant Payroll Manager Kami Van Bellehem University Payroll and Benefits Payroll Specialist Contact by email: FNInquiry@uillinois.edu 2
Please Turn off cell phones Avoid side conversations Sign the attendance roster Please hold questions until designated slides Complete the evaluation at the end of the workshop 3
Workshop Objectives Determining Eligibility Submitting Payment Requests Taxation of Payments 4
Payment Eligibility Two factors: 1. Entry status 2. Type of payment 5
Finding the Payment Eligibility Grid http://www.obfs.uillinois.edu 6
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Types of Payments Type of Payment Employment/Recurring Fellowships Independent Contractor - Including Honoraria Royalty Awards/Prizes/Human Subject Payments Other Income Qualified Scholarships/Fellowships (non-recurring) Non Qualified Scholarships/Fellowships (non-recurring) Travel Reimbursements under Accountable Plan Submission HRFE/Payroll FN Payment e-form FN Payment e-form FN Payment e-form FN Payment e-form SAR (UIC)/DAWS (UIUC) SAR TEM system 8
Submitting Payment Requests Abbreviation FN Payment e-form SAR DAWS TEM Full Name Foreign National Payment e-form (FNPeF) Student Account Payment Request Form Departmental Award Web System (UIUC only) Travel & Expense Management system 9
Employment/ Recurring Fellowship Payments HR Front End (HRFE) Payroll System Tax Status Review Appointment 10
Taxpayer Identification Numbers Type of Number Social Security Number (SSN) Issued by Social Security Administration Required for employment Individual Taxpayer Identification Number (ITIN) Temporary Control Number (TCN) Issued by Internal Revenue Service SSN ineligible Application Form W-7 Issued by University of Illinois Required for employment setup in system 11
Temporary Control Numbers Employee Type Method of TCN Issue Student Non-Student On the Notice of Acceptance (NOA) Request from the icard ID office UIC Office of International Services (OIS) UIUC University Payroll & Benefits (UPB) UIS Office of International Services (OIS) 12
Tax Status Review Appointment FN: SSN / ITIN Application FN: TCN Received Unit: HRFE / Banner verified Bring SSN or receipt! FN: Schedule Appointment with UPB 13
Tax Status Review Appointment 14
Questions? 15
FN Payment e-form Payments Type of Payment Employment/Recurring Fellowships Independent Contractor - Including Honoraria Royalty Awards/Prizes/Human Subject Payments Other Income Qualified Scholarships/Fellowships (non-recurring) Non Qualified Scholarships/Fellowships (nonrecurring) Travel Reimbursements under Accountable Plan Submission HRFE/Payroll FN Payment e-form FN Payment e-form FN Payment e-form FN Payment e-form SAR (UIC)/DAWS (UIUC) SAR TEM system 16
FNPeF Payments Employer controls result, not method of work Independent Contractor Professional and Artistic Services (P&A) Contract Other documentation 17
FNPeF Payments Appreciation payment under $5,000 Honorarium Not to avoid procedures for paying a consultant Not to pay an employee Request for Honorarium form Not as a reimbursement for undocumented expenses 18
FNPeF Payments Copyrights Patents Permissions Documents Royalty Taxation variables Source Tax treaty 19
FNPeF Payments Recognition of Achievement Documents Awards Prizes Taxation variables 20
FNPeF Payments Research Subject Documents Human Subject 21
FNPeF Payments Documents Insurance Rent Other Income Medical Bills Door Prizes 22
FNPeF 23
Submit FNPeF Complete form Submit with proper documentation Fax documentation to 217-239-6909 24
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Questions? 27
SAR/DAWS Payments Type of Payment Employment/Recurring Fellowships Independent Contractor - Including Honoraria Royalty Awards/Prizes/Human Subject Payments Other Income Qualified Scholarships/Fellowships (non-recurring) Non Qualified Scholarships/Fellowships (nonrecurring) Travel Reimbursements under Accountable Plan Submission HRFE/Payroll FN Payment e-form FN Payment e-form FN Payment e-form FN Payment e-form SAR (UIC)/DAWS (UIUC) SAR TEM system 28
SAR/DAWS Payments Non-taxable tuition, fees, education materials Qualified Scholarships Exceptions Qualified Scholarships Urbana: DAWS Non UI students: FN e-form 10 or more same C-FOAP: Financial Aid Office 29
SAR/DAWS Payments Qualified Fellowships Study or research Qualified Fellowship See OBFS Website 30
SAR/DAWS Payments Non-Qualified Scholarship or Taxable indirect educational expenses Fellowship Non- Qualified Scholarship or Fellowship Taxation Variables Treaty Source Visa 31
Before Submitting Determine correct payment option Scholarship and Fellowship Payments to Nonresident Alien Students Determination, Checklist and Examples Determine source Foreign Source Income Chart 32
Submit Student Account Payment Complete form Request Form (SAR) DAWS for UIUC qualified scholarships FN Payment e-form for non-ui student 33
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Questions? 36
Travel Reimbursement Payments Type of Payment Employment/Recurring Fellowships Independent Contractor - Including Honoraria Royalty Awards/Prizes/Human Subject Payments Other Income Qualified Scholarships/Fellowships (non-recurring) Non Qualified Scholarships/Fellowships (nonrecurring) Travel Reimbursements under Accountable Plan Submission HRFE/Payroll FN Payment e-form FN Payment e-form FN Payment e-form FN Payment e-form SAR (UIC)/DAWS (UIUC) SAR TEM system 37
On behalf of the University Hotel, meals, transportation Travel & Expense Reimbursement Business purpose, receipts 38
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TEM System User Grid User Use System Employee Student Accountable Plan reimbursement Accountable Plan reimbursement TEM TEM (with Tax Reporting and Withholding Checklist for Foreign National Reimbursements) Non- Employee Study-related reimbursement Reimbursement SAR TEM 40
TEM Resource Page www.obfs.uillinois.edu/tem-resources/ Job Aids Recorded Webinars Course Registration Policy Links Announcements TEM Questions? E-mail temhelp@uillinois.edu 41
Payment Receipt Payment Submission HRFE/Payroll FN Payment e-form SAR DAWS TEM Payment Delivery Direct deposit Direct deposit/paper check Student Account credit Student Account credit Direct deposit/paper check 42
Questions? 43
Taxation Individual s Tax Residency Status Type of Payment Taxation Source of Payment Tax Treaty 44
Individual s Tax Residency Status Resident Alien (RA) Nonresident Alien (NRA) 45
RA vs NRA Differences RA NRA Taxation Same as U.S. citizen Varies FICA Source Withheld Pays U.S. taxes regardless of source May qualify for exemption Pays U.S. taxes only on U.S. sourced income Tax Treaty Not applicable (usually) Treaty eligible 46
Substantial Presence Test 31-day test 183-day test 47
Day Count All days present in the U.S. during the current calendar year Days present in the U.S. during 1st preceding calendar year Days present in the U.S. during 2nd preceding calendar year Total number of countable days Formula x 1 = (A) x 1/3 = (B) x 1/6 = (C) (A) + (B) + (C) = (D) 48
John Doe entered the U.S. on August 3, 2013. He was present in the U.S. for 300 days in 2014 and 100 days in 2015. Day Count All days present in the U.S. during the current calendar year Days present in the U.S. during 1st preceding calendar year Days present in the U.S. during 2nd preceding calendar year Total number of countable days Formula 100 x 1 = (A) 300 x 1/3 = (B) 150 100 100 25 x 1/6 = (C) (A) + (B) + (C) = 225 (D) Less than 183 = NRA Equal to or More than 183 = RA Therefore, John Doe is a RA for 2015. 49
Days of Presence Exemptions F-1 or J-1 students exempt 5 years J-1 non-students exempt 2 years 50
Individual s Tax Residency Status Type of Payment Taxation Source of Payment Tax Treaty 51
Withholding Type of Payment Withholding Report Employment Graduated W-2 Recurring Fellowships Non-Qualified Scholarships/ Non-recurring Fellowships 30% except for F, J, M reduced rate 14% 30% except for F, J, M reduced rate 14% 1042-S 1042-S Independent Services/Honorariums 30% 1042-S Royalty 30% 1042-S Awards/Prizes/Human Subject Payments 30% 1042-S Other Income 30% 1042-S Qualified Scholarships/ Non-recurring Fellowships Travel Reimbursements (Under Accountable Plan) None None None None 52
Individual s Tax Residency Status Type of Payment Taxation Source of Payment Tax Treaty 53
Source of Payment U.S. sourced Foreign sourced 54
Identifying Source by Payment Type Type of Income Independent Personal Services Royalties Patents, Copyrights, etc. Royalties Natural Resources Scholarship and Fellowship Grants Prizes and Awards Source Determined By Where services are performed Where property is used Where property is located Generally, residence of payor* Where activities are performed 55
Individual s Tax Residency Status Type of Payment Taxation Source of Payment Tax Treaty 56
Tax Treaty A taxation agreement Defines tax treatment Identifies taxation for each payment type For nonresident aliens 57
Department s Role Help complete and submit required forms and documents Assist University of Illinois compliance 58
Assistance Information Campus Contact Immigration information Pay-related information Urbana- Champaign Chicago Springfield ALL International Student & Scholar Services Office of International Services Office of International Student Services University Payroll & Benefits (UPB) Foreign National Service Center FnInquiry@uillinois.edu 59
Helpful Links http://www.obfs.uillinois.edu Policy Manual Section 17 Policy Manual Section 18.2 IRS Service Locations Outside the US US Embassy Locations 60
Helpful IRS Publications IRS Forms and Publications 1-800-TAX-FORM (1-800-829-3676) Publication Publication 515 Publication 519 Publication 901 Description Withholding of Tax on Nonresident Aliens and Foreign Corporations U.S. Tax Guide for Aliens U.S. Tax Treaties 61
Forms Form Links Tax Status Review Appointment Registration FN Payment e-form SAR Form TEM Resources 62
Questions? 63
Thank you! 64