Honorarium Payments to Foreign Nationals (Nonresident Aliens for Tax Purposes)

Caution
What Activities Can Be Paid Through an Honorarium
Who's Eligible to Receive an Honorarium
Honorarium Rule ("9/5/6" rule)
Visa Waiver Program
Withholding
Letter of Invitation
Reimbursement When Foreign National Exceeds Honorarium Rule
Honorarium Payment to Foreign Entities
Honorarium Payment to J-1 Scholars
Immigration and Tax Forms for an Honorarium Payment to a Foreign National
Visa Examples

Caution

U.S. law significantly restricts what employment foreign nationals may accept. Before committing to an honorarium for a foreign national, departments must ensure the person has the appropriate visa that allows such a payment. For short-term visits made for the purpose of delivering a lecture or speech, only certain visa classifications are authorized to accept an honorarium. An individual already in the U.S. may not necessarily be here in the correct visa classification. For instance, diplomats, employees of foreign governments, military personnel, or others on foreign government representative visas, employees of the World Bank or political officers attached to a foreign embassy in the U.S. hold visa classifications specific to the duties of their posts and are not permitted to earn additional income through activities such as speaking engagements.

Do not assume that an international visitor holds the correct visa classification, especially if he or she is already in the U.S. You must look at the individual's passport visa and stamped I-94 card to determine visa classification.

What Activities Can Be Paid Through an Honorarium

An honorarium may be paid to a foreign national for "usual academic activity or activities." These activities include lecturing, teaching and sharing of knowledge or performance.

Honorarium Rule ("9/5/6" Rule)

Foreign nationals in B-1, B-2, VWB, and VWT status may accept an honorarium and/or reimbursement of travel expenses under the following conditions:

• For "usual academic activity or activities"
• 9 days or less at the UW
• The individual has accepted such payment from no more than 5 educational or research institutions (including the UW)
• In the previous 6-month period.

Who's Eligible to Receive an Honorarium

Foreign nationals holding the following visas may receive an honorarium provided they meet the "Honorarium Rule."

• B-1 or B-2
• VWB (Visa Waiver Business) or VWT (Visa Waiver Tourist) Foreign nationals holding the following visas may receive an honorarium and do not have to meet the Honorarium Rule.
• J-1 scholars at the UW or from another university for an occasional lecture at the UW.
• H1-B, E3, TN and O-1 visa holders may receive an honorarium only if they are sponsored by the UW. (H-1B, E3, and O-1 visa holders at another university may only receive reimbursement for travel and/or incidental expenses, not an honorarium for academic activity at the UW.)

See the chart, Payments That Can Be Issued to Foreign Nationals, for more information.

Visa Waiver Program

Foreign nationals from a participating country in the Visa Waiver Program do not have to have a visa to enter the U.S. for business or tourist travel. However, they must have a machine-readable passport valid for six months past their expected stay in the U.S. (unless a country-specific agreement provides an exemption). The foreign national may stay in the U.S. for business or tourist purposes for a maximum of 90 days. No extension of the stay is allowed. In addition to their passport, VWP travelers must also present a completed and signed I-94W, "Nonimmigrant Visa Waiver Arrival-Departure Record," to U.S. officials at their port of entry.

For more information on which countries are in the program, see the Department of State website about the Visa Waiver Program.

Withholding

An honorarium paid to a foreign national is subject to 30% withholding, unless the person can claim a tax treaty benefit. This withholding also applies to a nonresident alien entity. Travel reimbursement is not subject to withholding because it is not considered income.

Letter of Invitation

A letter of invitation must be sent to every foreign national invited to the UW who will receive an honorarium or reimbursement for travel expenses. The letter should come from the department that is sponsoring the activity. The letter should contain the following information:

• Name of the event or activity
• Date of the event
• The amount of any honorarium that will be paid
• Whether travel and/or incidental expenses will be reimbursed
• Contact information at the sponsoring UW department for further information

To use one of the sample letters below, first determine the foreign national's visa status. If there is any question about the appropriate visa letter to send, contact the UW ISS Office.

• Requires B visa to enter U.S.- Letter A (Needs B Visa)
• From country in Visa Waiver Program (doesn't need visa) - Letter B (Doesn't need B visa)
• J-1 scholar already in U.S.- Letter C (Has J-1 visa)

Reimbursement When Foreign National Exceeds Honorarium Rule

The Honorarium Rule limits how many times over a 6-month period a foreign national holding a "B" status visa may receive an honorarium and/or travel reimbursement.

Foreign nationals holding a B-1/VWB visa who exceed the rule are not prohibited from giving an invited lecture at the UW. However, they cannot receive an honorarium but may receive reimbursement for travel and/or incidental expenses.

Foreign nationals holding a B-2/VWT visa who exceed the rule also can continue to give lectures at the UW. However, these foreign nationals cannot receive either an honorarium or travel reimbursement. See the table below, Reimbursement by B Visa Type When Honorarium Rule is Exceeded.

Reimbursement by B Visa Type When Honorarium Rule is Exceeded

B Visa Type	Pay honorarium?	Reimburse travel and/or incidental expenses?
B-1/VWB	No	Yes
B-2/VWT	No	No

Honorarium Payment to Foreign Entities

In some cases, the honorarium payment may be made to a foreign entity rather than to a person. The entity is subject to 30% withholding. The entity may be able to claim an exemption due to a tax treaty benefit. There are three possibilities for documentation for a withholding tax exemption for a foreign entity:

• The most common occurrence is when the entity is incorporated under the laws of a foreign country. To claim a tax emption, the entity must complete Parts 1 and 2 of Form W-8BEN. A taxpayer identification number, (EIN), is required to submit the form.
• If the entity is claiming an exemption because the honorarium is effectively connected to a US trade or business, and is, therefore, making estimated tax payments based on net income, they must complete Form W-8ECI which requires a US EIN. This exemption does not apply if the company is a foreign personal holding company.
• If the entity is claiming that the company is a tax exempt entity, and the payment is for activities that are consistent with their tax exempt purpose, they must complete Form W-8EXP which requires a US EIN, along with either a) a letter from a US lawyer certifying that they would be tax exempt in the United States or b) a Notice of Approval from the IRS of their tax exempt status in the United States.

In each case, UW will report the honorarium and the company will have income tax return filing obligations. Contact Accounts Payable for more information about how an entity can claim a tax treaty benefit exemption or consult IRS Publication 515, US Withholding on Nonresident Aliens and Foreign Entities and the instructions to the above forms, all of which are available on the IRS web site.

Honorarium Payment to J-1 Scholars

J-1 Scholars - Sponsored by UW

J-1 scholars may receive compensation for occasional lectures or short-term consultations at the UW or at another university that involve wages or other remuneration. The occasional lectures or consultations must be authorized in advance and in writing by the UW ISSO.

To qualify for compensation authorization, the off-campus activity must meet all of the following:

• Be short-term or occasional in nature.
• Be an exchange of expertise which would further the goals of international educational exchange.
• Relate to the objectives for which the exchange visitor came to the U.S.
• Benefit the exchange visitor's professional career development with only incidental benefits to the employer.
• Not delay the completion date of the scholar's program.

Written Work Authorization

To request authorization to engage in occasional lectures or short-term consultations involving wages or other remuneration, the J-1 scholar should take the following steps:

• Present the letter of invitation from the institution offering the honorarium to his/her home department.
• Ask the home department to authorize in writing permission to participate in the activity.
• Ask the home department to forward the authorization to the UW ISS Office for their review and authorization.

The ISSO reviews the letters and makes a written determination that the activity is warranted and that it will not interrupt the scholar's original objective. ISS will also document the new activity in SEVIS (a government database that maintains information on exchange visitors during their stay in the U.S.).

J-1 Scholars-Sponsored by Another University

A J-1 scholar at another university may be invited to the UW to give a lecture or participate in a sanctioned academic activity on an occasional basis. The scholar must obtain written authorization for the activity from the sponsoring university's Responsible Officer in the International Students Office in advance of the activity. The written authorization must be included with the paperwork that is forwarded to Accounts Payable as part of the request for a check.

Immigration and Tax Forms for an Honorarium Payment to a Foreign National

The process for foreign nationals to be paid an honorarium and/or travel reimbursement at the UW is complicated and has multiple facets. The foreign national must travel on the correct visa; the department needs to do advance planning; tax treaty benefits may impact the tax rate for the honorarium; and, several different types of forms are needed for the payment.

The following is an overview of the process for paying an honorarium to a foreign national for academic activity in the U.S. Use the checklist, Inviting & Paying an Honorarium to a Foreign National, to facilitate this process for each invitation. Maintain a copy of the checklist in department files for audit purposes.

• Department confirms with the foreign national whether or not he or she meets the Honorarium Rule, if coming to the U.S. on a B visa or from a visa waiver country.
• If the foreign national is a J-1 scholar, department explains the requirement for written authorization.
• Department determines if foreign national is eligible for a tax treaty benefit.
• If eligible, department determines if the person has either a SSN or ITIN. If the foreign national doesn't have either tax identification number, department makes an appointment with UW Accounts Payable Office for the individual to apply for an ITIN when on campus. The ITIN is a requirement to receive a tax treaty benefit.
• Department sends invitation letter to foreign national with details about the activity. This letter is required when applying for a B visa.
• Foreign national applies for a B visa if traveling from a country not in the Visa Waiver Program. The visa is issued by the U.S. Department of State. The visa stamp is affixed to passport with one of these possible notations: B-1; B-2 or the B-1/B-2 (NOTE: B-1 is UW preference).
• At port of entry to U.S., individual presents passport with visa, letter of invitation and a completed Form I-94 (or I-94W for waiver countries) to immigration authorities. Visitor will have digital photographs and fingerprints taken.
• Once at the UW:
  • Department has foreign national complete UW Form 1007, Foreign National Payment Data Sheet.
  • Department makes a copy of the foreign national's passport identity page and I-94 card. For J-1 scholar, department makes copy of work authorization letter from UW ISSO and a copy of their DS 2019.
  • If the foreign national can claim a tax treaty benefit but doesn't have a tax identification number (i.e., SSN or ITIN), he/she completes a W-7 form. Foreign national applies, in person, at Accounts Payable Office for an ITIN. NOTE: Appointments are required to apply and can be requested via email at itin@u.washington.edu.
  • If the foreign national can claim a tax treaty benefit, he/she also completes Form 8233, Exemption from Withholding on Compensation for Independent Personal Services of Nonresident Alien Individual. If payment is to an entity, the appropriate W-8 form is completed.
  • Department completes UW Form 1631, Visiting Lecturer/Invited Speaker/Instructor or UW Form 1632 "Employee versus Independent Contractor Classification" depending on the type of service being provided. If payment is to an entity, no Form 1631 is needed.
  • Department completes a check request form for honorarium payment (up to $3,000) and a separate check request form for travel reimbursement (check can be for any amount for travel reimbursement). For an honorarium payment of $3,000 or more, department submits an invoice voucher through Accounts Payable.
• To request honorarium under $3,000 and travel reimbursement: Department sends the following to Accounts Payable to request checks:
  • Two check request forms; one for the honorarium and one for travel reimbursement. In status box, mark "Non-Resident Alien." Two forms should be cross-referenced.
  • UW Form 1631 or 1632, depending on the type of service being provided by the foreign national
  • UW Form 1693
  • Copy of stamped I-94 (or I-94W). NOTE: Be sure copy is readable.
  • Copy of identity page from passport
  • Copy of work authorization for J-1 scholar and a copy of their DS 2019
  • IRS Form 8233 or appropriate W-8 form, if a tax treaty benefit is available
    • NOTE: For Canadian foreign nationals, copy of either his/her driver's license and social insurance card OR copy of identity page from passport. To request travel expense reimbursement only: Department sends the following to Travel Office:
  • TEV signed by foreign national
  • Copy of stamped I-94 (or I-94W) NOTE: Be sure copy is readable.
  • Copy of identify page from passport. NOTE: Be sure copy is readable.
  • Copy of work authorization letter from UW ISSO for J-1 scholar and a copy of their DS 2019
  • Copy of I-20 for F-1 students
    • NOTE: For Canadian foreign nationals, copy of either his/her driver's license and social insurance card OR copy of identity page from passport.
• The check is distributed to the foreign national as indicated by the department in the "Special Instructions" box on the check request form. If there are no special instructions, the check is mailed to the national's address noted on the form. The same disbursement process is followed for an invoice voucher or travel payment.

Visa Examples

The following examples illustrate some common situations encountered by foreign nationals visiting the UW to engage in academic activities.

• Canadian foreign national
  The School of Drama decides to invite John Whitebread, director of a Canadian acting troupe, to give a guest lecture. The department sends Mr. Whitebread an invitation that includes the purpose of the visit and states that travel reimbursement will be paid. Mr. Whitebread will need to present either his passport or his driver's license and social insurance card and complete the appropriate paperwork for travel reimbursement. Request for travel reimbursement would be sent to the Travel Office.
• VWB or VWT foreign national
  Dr. Schwartz, a resident of Germany, is invited to the UW to give a lecture in molecular biology and visit for 2 days. The Biology department offers to reimburse him for all expenses and pay an honorarium of $2,000. Dr. Schwartz is from a country in the Visa Waiver Program, so he may enter the U.S. as a VWB or VWT with a letter of invitation from the department. Because Germany has a tax treaty with the U.S., he is eligible to apply for treaty benefits to avoid the mandatory 30% tax withholding requirement. Since he has a Social Security Number, his honorarium payment will be for the full amount. Two check requests, one for honorarium and the other for travel reimbursement, would be sent to Accounts Payable.
• J-1 Scholar already in the U.S.
  Dr. Marconi, a resident of Italy, has been in the U.S. as a J-1 scholar conducting research at M.I.T. The Dean of Engineering at the UW decides to invite Dr. Marconi to the Seattle campus to conduct a seminar. The dean will offer both an honorarium and reimbursement of expenses. According to DHS regulations, Dr. Marconi must have a letter of work authorization from M.I.T. (his J-1 visa sponsor) in order to receive payment from the UW. Two check requests, one for honorarium and the other for travel reimbursement, should be sent to Accounts Payable. A copy of the work authorization from the M.I.T. International Students & Scholars Office and Dr. Marconi's DS 2019 must accompany the paperwork sent to Accounts Payable.

Contact Accounts Payable for more information about honorarium payments.