While academic institutions may pay honoraria and/or to provide reimbursement of expenses to foreign nationals who enter the U.S. as tourists (B-2) or visitors for business (B-1), there are certain conditions for payment and not everyone in B-1/B-2 or VWB/VWT is eligible. Please read the information below for details.
- WSU uses the term “honoraria” for payments that represent a token of appreciation. The term is not defined in the Internal Revenue Code and the IRS classifies such payments as fees.
- “Honorarium payments” comes from INS rules under the American Competitiveness and Work Force Improvement Act (ACWIA) of 1998 and the proposed regulations issued May 30, 2002.
- Reimbursing a non-resident alien under the accountable travel plan is much simpler than reimbursing an individual for an honorarium. Non-resident aliens are not required to have SSN's when being reimbursed under the accountable travel plan, yet paying an honorarium does require an SSN or ITIN.
- Determining payment eligibility to non-resident aliens is very complex. It is not as simple as having a specific VISA type. Each individual’s situation is different. The more information that can be collected prior to the individual’s arrival in the US, the easier the issue of payment determination can be resolved. Have them read this web site prior to arrival. The fact that a department or college has the funds and wants to make an honoraria payment is not the deciding factor. WSU is required to make only authorized payments and the basis for these payments is very restrictive.
Honorarium Payments Defined
- Recipient is not an employee or contractor at WSU.
- Purpose of honorarium is for “usual academic activities”. This includes lecturing, teaching and sharing of knowledge or performance. No admission may be charged at the event.
- WSU provides non-immigrant with invitation letter which includes a description of the event or activity as well as the applicable dates and locations along with what remuneration has been offered.
- ACWIA provides that during a six-month period, an immigrant may accept an honorarium and reimbursement of associated travel expenses from no more than five (5) organizations and that the event or activity may not last more than nine (9) days at any single institution. Thus, the visitor is limited to a maximum of 45 possible days of academic activity during a six-month period. This is known as the honoraria 9/5/6 rule.
- ACWIA provides that travel expenses be reimbursed to B-1 (and W/B) non-immigrants regardless of whether or not the individual’s activities have exceeded the 9 day/5 visits/six-month honorarium rule. No honoraria can be paid.
- B-2 (W/T) immigrants who exceed the 9/5/6 honorarium rule are ineligible for honorarium payments and travel expense reimbursements.
- Per Linda Dodd-Major, a well-known immigration expert, Congress primarily meant honorarium payments only for B visa types.
Payment Matrix
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If NRA is from Canada or Mexico, show invitation letter at point of US entry and request a B-1 visa. Or if from Canada obtain proof of Canadian citizenship.
WSU Payment Requirements If Not Requesting Treaty Benefits:
The following documents must be submitted to Accounts Payable/Travel to authorize an honorarium payment and/or travel reimbursements to a foreign national.
- B-1 / B-2 Short-Term Visitor Declaration Form
- Copy front and back of I-94 or I-94W and visa or if from Canada obtain proof of Canadian citizenship
- Copy of US social security card or US issued ITIN if honoraria payment
- Travel Expense Voucher
WSU Payment Requirements If Requesting Treaty Benefits:
The following documents must be submitted to Accounts Payable/Travel to authorize an honorarium payment and/or travel reimbursements to a foreign national.
- B-1 / B-2 Short-Term Visitor Declaration Form
- Copy front and back of I-94 or I-94W and visa or if from Canada obtain proof of Canadian citizenship
- Copy of US social security card or US issued ITIN if honoraria payment
- Completed Form 8233
- Travel Expense Voucher
IRS Rules
All honorarium payments to non-resident aliens must be reported annually by WSU on a Form 1042S. The recipient is required to file a US tax return.
All honorarium payments to non-resident aliens will be taxed at a 30% tax rate unless a completed Form 8233 has been provided which identifies an appropriate tax treaty provision.
In order to claim a tax treaty exemption from income tax withholding, the NRA must be from a country which has a tax treaty with the US and has a teacher/researcher provision.
Visa Waiver Program – WB / WT Visa Classification
Certain scholars coming to the US for tourism or short business visits can enter without getting a visa stamp in their passport under the Visa Waiver Program. To be eligible, scholars must be citizens of the following countries:
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Additionally, they must intend to remain in the US for fewer than 90 days, have a valid passport and have a nontransferable, nonrefundable round-trip ticket.
Scholars in the WB classification cannot extend their stay or change immigration status. Entry under the Visa Waiver Program (WB) is an excellent option for scholars who will not receive a salary. These scholars would otherwise need to apply at a United States Consulate for a visa stamp in either the B-1 (Visitor for Business) visa classification or in another non-immigrant classification, such as J-1 Exchange Visitor.
As with the requirements for the Visitor for Business (B-1) visa classification, scholars coming under the Visa Waiver Program (WB) must have a letter of invitation from their WSU faculty host to present to the immigration inspector at the airport when they enter the country. At the discretion of the inspector, the scholar’s Form I-94 will be noted “WB” and he/she will be permitted to engage in business activity while in the United States.
Honoraria Payment Requests for Foreign Entities:
It is a common misconception that payments to a foreign corporation or institution is not subject to withholding. The type of payee has no affect on the character of the income or its source. Whether the payment is made to a foreign visitor or to the foreign entity, WSU must withhold 30% on the honoraria, unless an exception applies, and report it on a Form 1042-S at year end.
There are three possibilities for documentation for a withholding tax exemption for a foreign entity:
- If they are claiming exemption under an income tax treaty, they must submit to you a completed Form W-8BEN with Parts 1 and 2 completed which includes a US taxpayer identification number, in this case an EIN.
- If they are claiming exemption because the income is effectively connected to a US trade or business, and are, therefore, making estimated tax payments based on net income, they must submit to you a completed Form W-8ECI which includes a US EIN. This exemption does not apply if the company is a foreign personal holding company.
- If they are 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 give you a completed Form W-8EXP which includes 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 WSU must report the income on Form 1042 and 1042-S and the company will have US income tax return filing obligations.
If a company has further questions suggest that they refer to 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, www.irs.gov.