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Honoraria

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Process for Taxation of Payment for a Foreign National

Description

An honorarium is a fee that may be paid to an international speaker who meets all of the following criteria:

  • visit to the N C State University campus is equal to or less than 9 days, and
  • visitor to the campus has not accepted payment from more than five institutions or organizations in the previous six month period.
  • visitor is on a B visa or VWB - visa waiver (Canadian visitors - passport only)

Note: Honoraria fees are subject to a 30% federal income tax withholding (34% if > $1,500). If the speaker is to receive a specific fee, there are two possible choices:

  1. File a tax treaty, which could exempt them from part or all of the tax, if the speaker's country has a tax treaty with the United States. University Payroll will need the speaker's SSN or ITIN to file for tax treaty exemption.
  2. Increase the gross amount paid as the honorarium by dividing the desired payment by 0.7 to "gross it up", or divide by 0.66 if the desired payment is >$1,500. The individual's department absorbs the cost of the tax.

Taxation of Payment

The process described below shows the actions required before a foreign national, who is here as a speaker on an honorarium, can receive correct taxation of payment from the University Payroll Department.

Responsible People

Three people are involved in this taxation of the payment process. Learn the actions you should take in this process by choosing, who you are, from the following list:

  1. Speaker
  2. Department Payroll Coordinator or Human Resource representative in the department that has sponsored the speaker.
  3. Foreign National Tax Specialist in the University Payroll Office
  1. Speaker
    1. Enter the United States on a B visa or a VWB visa.
    2. Have your passport.
    3. Have your I-94 card if you have a B visa.
    4. Obtain either a U. S. Social Security Administration (SSA) social security number (SSN) or an IRS individual taxpayer identification number (ITIN)
    5. Note: You are responsible for filing a federal and state income tax return each year.

    6. Have your IRS Form W-8BEN with lines 1, 4, 5 filled-in, dated and signed. If you have a social security number (SSN) or a taxpayer identification number (ITIN), fill out line 6. Do not fill out lines 9 & 10, if you are claiming treaty benefits. You should fill out Form 8823.
  2. Department Payroll Coordinator / HR Representative
    1. Submit to the University Payroll Department the following documents:
      • copies of the I-94 card, if applicable, passport photo page, passport expiration page (if not on photopage), B1 visa, if applicable
      • W-8BEN
      • Form 8233, if applicable, for tax treaty benefits
      • SSN or ITIN .
    2. Obtain a dummy social security number from OIS until individual receives his own social security number.
    3. Enter the honorarium recipient into the HR system using the VPAF with a flat-rate job code of S970.
    4. Prepare the flat-rate request form, write "honoraria payment" in the additional comments section and submit to your customer service representative (CSR) in HRIM for approval.
    5. Enter the payment amount through Time and Labor.
    6. Note: Honoraria payments are handled differently depending on 1) where the speaker's place of employment is located and 2) whether the individual is a foreign national or a citizen. For example:

      • if the place of employment is NCSU, then this is not an honorarium, but a supplement to pay.
      • if the place of employment is another location in the United States, then you must ask, is the speaker a citizen? If yes: request for payment goes to accounting; if no: request for payment goes to payroll.
    7. Notify the foreign national tax specialist in University Payroll that a payment is being processed.
    8. Mail check to speaker when you receive it from University Payroll Department.
  3. University Payroll Department's Foreign National Tax Specialist
    1. Collect from the department the following:
      • copies of the I-94 card, if applicable, passport photo page, passport expiration page (if not on photopage), B1 visa, if applicable
      • W-8BEN
      • Form 8233, if applicable, for tax treaty benefits
      • SSN or ITIN
    2. Switch payment type to honorarium earning code.
    3. Send check to department payroll coordinator / HR representative in the department requesting the honorarium.

 

Last Edited: November 27th, 2013