Paying Foreign National Visitors and Independent Contractors for Activities Performed In the United States


 Introduction

U.S. tax and other laws and international treaties can complicate payments to foreign nationals. This guide is intended to simplify the process.

Following are 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 -type activity.
  • Payments types such as travel grants or 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.

 Step 1. Can we legally pay?

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...

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

  1. The individual has a U.S. tax identification number and qualifies for a tax reduction under the tax treaty between the U.S. and their country of tax residency.   Applying for this tax reduction requires some extra paperwork, but we are here to help.

    OR
  2. The payment type is a travel or business expense that is substantiated as required by the University’s Travel and Business Expenses Policy 05-07-01.

*Exception: 14% for J-1 and F-1 travel grants and

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. If there is no U.S. tax treaty with your visitor or independent contractor's country (check here), go directly to Option 1 – Less Work-Standard Withholding since the University must withhold tax.

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.


Option 1: Less Work - Standard Tax Withholding


The EASIEST (but more costly for certain types of payments) option for your visitor would be to not apply for reduced tax withholding. Many foreign nationals choose this option due to time constraints. Also, this is the ONLY option if the U.S. has no tax treaty (and therefore no possibility for reduced tax withholding) with your visitor’s country.
Continue with Option 1

Option 2: More Work – Request Withholding Reduction


If your foreign national payee wants to apply for reduced tax withholding and does not have a U.S. tax identification number (TIN), instructions on how to apply for a TIN are located here. It currently takes the IRS 6 - 10 weeks to issue U.S. tax identification numbers to foreign national individuals. Most foreign nationals, who come to the U.S. frequently, will most likely already have one. If your foreign national payee already has a U.S. tax identification number, continue on for help in applying for reduced tax withholding.

Continue with Option 2

Option 1: Less Work – Standard Tax Withholding

This is what you will need (by payment type) to pay a foreign national who does NOT wish to apply for a tax withholding reduction:

  • Travel Grants : Send the following hard copies (in one packet) to the Payment Processing Office:
    1. A paper disbursement request with Travel Grant /Living Allowance written in the description field with authorizing signature
    2. A completed W8 (a copy is acceptable)
    3. Supporting documentation
    4. For tax withholding reduction to 14% for F and J visa holders include a copy of the following:
      • F visa holders: Form I-20 or EAD (Employment Authorization Document)
      • J visa holders: Form DS-2019
  • Independent contractor payments for professional services: Services Agreements must be reviewed by the Purchasing Services Department. Follow the instructions on this page.

*For wire or foreign currency check payments please see this page for instructions.

Option 2: More Work – Request Withholding Reduction

This is what you will need to pay a foreign national who wishes to apply for a tax withholding reduction:

    1. A completed W8  (a copy is acceptable)
    2. A description of the event
    3. Foreign National Information Form
    4. Electronic I-94 -  See special requirements for citizens of Canada, Bermuda, and Mexico.
    5. Passport Photo Page
    6. J-1 Scholars and students– copy of DS-2019 / F-1 students copy of EAD or I-20. Both classifications must include a for non-Pitt sponsored visitors
    7. If a tax withholding reduction is granted, the Foreign National Tax Office will provide a completed 8233 that must be signed by the individual
  • Travel Grants and :
    Send the following hard copies (in one packet) to the Payment Processing Office
    1. A paper disbursement request with “Travel Grant“ or “Living Allowance” written in the description field with the authorizing signature
    2. A completed W8 (a copy is acceptable)
    3. Supporting documentation
    4. Electronic I-94 -  See special requirements for citizens of Canada, Bermuda, and Mexico
    5. Passport Photo Page
    6. J-1 Scholars and students– copy of DS-2019 / F-1 students copy of EAD or I-20. Both classifications must include a Pre-Approval Letter for non-Pitt sponsored visitors
    7. Foreign National Information Form
  • 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. W8 - including part 2 of the W-8BEN to claim your tax treaty benefit
    2. Supporting documentation

*For wire or foreign currency check payments please see this page for instructions.

 Contact Us

We are here to help.  

Contact us:

  • for free consultation on U.S. tax withholding options
  • for assistance
  • if your payee does not fall into any of the categories mentioned in this guide.


Email:
ForeignNationalTaxOffice@cfo.pitt.edu

Phone: Foreign National Tax Office - 412-624-0919

Mailing Address for all hard copies:
Payment Processing and Compliance Office
116 Atwood Street
Pittsburgh, PA 15260