Tax and Reporting obligations differ for Foreign Nationals, Foreign Entities, and U.S. Citizens. The International Tax and Payment information contained on this page is designed to serve as a guide and provide resources for University Departments and University Employees when making payments to Foreign Nationals. You will find tax information, links to resources for international employees, and instructions for departments to follow when working with foreign visitors and entities.
Your payroll tax withholding is determined by your tax status in the United States. There are two tax statuses for nonimmigrants working in the United States:
- Resident Alien (RA) Status - this status will be taxed in general terms the same way a U.S. Citizen is taxed
- Nonresident Aline (NRA) Status - this status has special federal, state, and social security withholding rules
Please email email@example.com if you have questions concerning international tax and payment information.
There are two tests that can determine if an employee is considered an RA or an NRA for tax purposes:
- The Green Card Test - If you have a green card and are a lawful permanent resident at any time during the calendar year, you are considered a Resident Alien (RA) for tax purposes. Your withholding tax (payroll tax) and reporting (tax return) will generally be the same as a U.S. citizen.
- The Substantial Presence Test or SPT - This test counts days of presence in the United States over a three year period to determine if you have resided in the U.S. for a total of 183 days or more; if so, you are defined as a Resident Alien (RA) for tax purposes. Anyone who cannot accumulate the 183 day presiding total is considered a Nonresident Alien (NRA) until they pass the SPT.
- Note that F and J student visa holders and their dependents are exempt from counting days of presence for 5 years. The years do not have to run concurrently - any part of a calendar year will count as one year.
For more information about the Substantial Presence Test, please visit the Internal Revenue Service (IRS) Information Page.
Note: Upon initial hire, new employees are required to complete an SPT in the Immigration and Visa Office as part of the initial hire paperwork. The Immigration and Visa Office also requires this test be completed each calendar year, generally in November.
The following taxes may be withheld from each paycheck:
Federal Tax Withholding
The U.S. government imposes a tax on wages earned by all employees at graduated rates. The higher the payment the higher the tax bracket will be for tax withholding. An additional tax is imposed on earnings of Nonresident Alien employees in most cases. Students from India are excluded from this additional tax.
Note: Employees will be asked to complete the W-4 Form: Employee's Withholding Allowance Certificate when completing hiring paperwork in the VISA & Immigration Office. Information and instructions for completing this form may be found in IRS Notice 1392.Federal Tax Withholding & Reporting Information
Virginia State Tax Withholding
The Commonwealth of Virginia imposes a state tax on wages earned by all employees at lower graduated rates.
Note: Employees will be asked to complete form VA-4 Form: Employee's Virginia Income Tax Withholding Exemption Certificate when completing hiring paperwork in the VISA & Immigration Office. Employees should follow the same rules for completing the Federal W-4 Form referenced above.Virginia Tax Withholding & Reporting Information
FICA Medicare and FICA Old Age Withholding
Federal Insurance Contributions Act, or FICA, is a type of federal income tax for social security and medicare hospital insurance benefits. It is a mandatory payroll deduction in most cases, though Nonresident Aliens are exempt from this tax in the following situations:
- Student FICA Exemption: Generally a student who works at the school that she/he is enrolled in and regularly attends classes at while employed in a student position is exempt from social security tax withholding.
- Exemption for Individuals under F, J, M, and Q visa status - to qualify for this exemption an individual must be:
New Foreign National employees must complete their initial hiring and payroll paperwork in the VISA and Immigration Service Advising Office. Then ODU Payroll will process your payroll and withhold taxes. If an employee needs to change Visa or tax information, please contact the VISA and Immigration Service Advising Office to update all paperwork.
In most cases, employees must file a tax return with the federal government (IRS) and the Commonwealth of Virginia every year.
For more information about federal tax and reporting please see the IRS publication 519, U.S. Tax Guide for Aliens. For additional information about Virginia tax and reporting, please visit the Virginia Tax Site.
Please Note - the Office of Visa and Immigration Service Advising offers Nonresident Aliens tax preparation software each year to aid completion of the annual income tax return. Resident Aliens can visit a tax accountant or use a tax preparation software of their choice.
Employees must gather all tax documents received throughout the year in order to file annual tax returns. The following documents are some examples of necessary tax documents, though this is not an all-inclusive list:
- ODU W-2 Wage and Tax Statement - available on LeoOnline under Employee>Taxes, usually by January 31st of the following year.
- Form 1099 - used for any miscellaneous income, gambling winnings, or bank interest
- Form 1098-T - Tuition expenses - not generally used by NRA individuals
- Form 1098-E - Student loan interest
- Form 1095 - Proof of health insurance
- Form 1042-S - Foreign Person's U.S. Source Income Subject to withholding (i.e.: tax on prizes, scholarships, treaty benefits, etc.)
Most ODU tax documents are available in LeoOnline or mailed to the permanent address on file by Juanary 31st of the following calendar year. 1042-S Forms are mailed by March 15th.
General tax return due dates are listed below:
- Federal tax returns are due by April 15th of the following year.
- State tax returns are due by May 1st of the following year.
- 8843 Forms Only are due by April 5th of the following year.
Payments made to international visitors, students, and business entities require specific documentation in order to comply with federal and state tax laws and immigration guidelines. Generally payments are taxed at 30%, which is automatically withheld from the payment. In some instances, an exemption or allowance may lower or remove this tax withholding requirement.
International payments to individuals and companies may include payments such as: honoraria, travel reimbursements, prizes and awards, royalties, and more. These payments are processed in the Accounts Payable Office.
Instructions for paying international visitors, prizes, and payments to foreign entities are descirbed below.
Paying a foreign visitor requires information gathering and immigration/tax determinations to ensure the accuracy of the payment. Payment also depends on what country the visitor is visiting from, their declared tax home country, whether they are in the United States under a sponsored visa from another venue, or are visiting the U.S. on a B1/B2 visa or visa waiver.
Before inviting an international visitor to ODU, the department must:
- Determine what country the foreign national is visiting from and the visa type they will be using to enter the United States.
- Determine what the individual will be doing at ODU and the dates of these activities.
- Collect both the ODU Foreign National Information Form and the W-8BEN Form from the visitor before arrival in the United States and send them to firstname.lastname@example.org.
- After submission, the NRA and Payroll Coordinator will contact you for approval to invite the guest.
- Send a formal invitation letter to the guest detailing the activities, dates, and payment. See here for an invitation example.
When the visitor arrives at ODU, the department must:
- Collect a copy of the visitor's passport used to enter the United States.
- Collect a copy of the Visa the visitor used to enter the United States, if available.
- Have the visitor provide an I-94 Arrival History Report or obtain the visitor's written consent to print this report. Information on viewing travel history, directions, and printing the report may be found here.
During the visitor's time at ODU, the department should:
- Complete the IP Checklist.
- Complete the IPSC Form, and obtain the visitor's signature and date if they qualify as an independent contractor.
- Complete the Foreign Visitor Payment Request Form.
Please note - this form takes the place of a Memo Payment Request.
- Send copies of the IP Checklist, the IPSC Form, the W-8BEN, and the Foreign Visitor Payment Request Form to the Accounts Payable Audit Supervisor.
- Send the original package to email@example.com in order to make a payment. This complete package should include:
Please Note: Additional forms and necessary information may be required depending on individual circumstances. Please contact firstname.lastname@example.org with questions or concerns.
Prizes paid to Nonresident Alien individuals for ODU competitions are subject to 30% tax withholding at the time of payment. For more information about taxation rules and regulations, visit the IRS Alien Taxation website.
Please follow the process below to request a prize payment for a Nonresident Alien individual:
If the winner is an ODU Employee -
- Please contact email@example.com for further instructions.
If the winner is a Non-Employee -
- Collect the completed Foreign National Information Form and submit to firstname.lastname@example.org.
- Collect the W-8BEN Form or the COV Substitute W-9 Form per the instructions provided.
For more information about residency, please visit the Internal Revenue Service (IRS) Information Page.
- For non-ODU employees or students, send copies of the W8-BEN or the COV Substitute W-9 Forms, supporting information, and a Memo Payment Request to Linda Wallace in Accounts Payable.
- Send the following originals to email@example.com for payment, tax withholding, and IRS reporting within 30 days:
- Original Memo Payment Request
Be sure to include the Organizational Budget Code, subaccount code, and check pick-up instructions on the submitted Memo Payment Request. Supporting information about the competition and winner must also be included. Please Note - these requests must be signed by the Departmental Budget Unit Director.
- Foreign National Information Form
Please note: this form is not necessary for ODU employees
- W8-BEN Form or COV Substitute W-9 Form
- All supporting documentation
- Original Memo Payment Request
Payments to foreign companies are generally taxed at 30% at the time of payment unless there is an exemption or exclusion that may be applied to lower or remove this tax. Details are listed below regarding both the payments that are taxable and reportable, and those that are not taxable nor reportable.
Further information about the withholding of tax and treaty benefits relating to foreign companies may be found on the IRS website.
Nontaxable and Non-Reportable Payments Include:
- Payments for merchandise that do not include leases, license fees, maintenance fees, personal services, or subscriptions. Merchandise is shipped and taxed at the time it enters the United States.
A W-8BEN-E Form is required to identify the foreign company and create a vendor record in the Banner System.
- 100% foreign source payment to a foreign company - If all services are provided outside the United States and the company has no permanent establishment in the U.S., generally the payment is nontaxable and non-reportable. Examples include payments to a recruiting company in another country, or payments to a tour guide company in another country.
A W-8BEN-E Form is required to identify the foreign company and create a vendor record in the Banner System.
Please Note: The Statement Regarding Location of Services to be Performed Outside of the U.S.A. is also required.
Taxable and/or Reportable Payments Include:
License fees, lease agreements, certain advertising fees, maintenance fees and services, online subscriptions, and royalities. Please note - this list is not all-inclusive.
To pay a foreign vendor a payment for something not considered merchandise, follow the instructions listed below:
- If the vendor is new, collect a W-8BEN-E or other W-8 series Form and follow these submission instructions. This must be done prior to invoice receipt from the vendor.
- Provide detailed information regarding what exactly is being purchased to firstname.lastname@example.org.
This may include: emails, contracts, brochures, and website contact information. Provide a copy of the completed W-8BEN-E or other W-8 series Form completed by the vendor with your submission.
- The department will receive an email detailing the tax and reporting requirements.
- If a payment is made annually and a treaty benefit has been requested by the vendor, a new W-8BEN-E Form will be required every three years.
- New W-8BEN-E Forms are also required when there is a significant change to the vendor's information (i.e.: an address change).
If the payment is deemed taxable, the tax withholding must take place before the payment is made. If the payment requests a treaty benefit reducing or removing the tax, the payment becomes reportable and an examination of the W-8BEN-E is required before payment can be made.
Please don't hesitate to contact email@example.com with any questions.
A scholarship or fellowship grant is an amount given to an individual for study, training, or research, and which does not constitute compensation for personal services.
The portion of U.S. source scholarships and fellowships that apply to any payments above tuition and required fees are taxable and reportable for all students; such examples include payments for housing, meals, insurance, and any payment for fees not required by all or required for a specific curriculum.
U.S. Citizens and Resident Aliens for tax purposes are required to self-report taxable scholarships; however, Nonresident Alien students must have taxes withheld at the time of payment and reported to the IRS via the 1042-S Form. Students in the U.S. on F and J visa types are taxed at 14%, while all others are taxed at 30%.
Scholarships above tuition and fees are taxable; however, treaty benefits may lower tax withholding and require that an individual taxpayer identification number (ITIN) or a social security number (SSN) be issued to the student. Treaty benefits require that a W8-BEN Form be completed with the treaty article number and ITIN or SSN before benefits can be considered. A list of available U.S. source scholarship treaties by country may be found on the Scholarship or Fellowship Grant Treaty Benefits Table.
If you are paying a fellowship, scholarship, allotment, or stipend that does not include a service component, please contact firstname.lastname@example.org for assistance and information.