What are the procedures when an NRA is hired by an UMSL department?
What if the NRA employee does not have a Social Security Number?
What must departments do when making payments through Accounting to NRA's?
What is the procedure for scholarship awards?
What is the procedure for prizes and awards?
What is the procedure for honorarium payments?
How does the nonresident file their tax return?
How do I pay for services performed outside the U.S.?
What issues arise with software agreements?
How do a pay the U.S. agent of a nonresident person?
How can I learn more about the NRA taxation process at UMSL?
What are the procedures when an NRA is hired by an UMSL department?
When an NRA has been hired, the department first needs to enter the employee’s payroll appointment information into ePAF. When the employee receives the email from the UM System to complete their new hire paperwork, they will follow the instructions in the email to submit their original documents in person to Human Resources and complete their online onboarding. They also need to then make an appointment to visit the Nonresident Alien Tax Specialist to complete their tax documentation. Appointments can be made either by calling 314-516-7298 or emailing webbjj@umsl.edu.
The employee does not need to have a Social Security Number at the time of hire to be able to work (see next section to apply for a Social Security Number).
When the employee meets with the Nonresident Alien Tax Specialist, they need to bring all of their immigration documents (usually passport, I-94, and I-20 or DS-2019) and their U.S. Social Security Number if they have one.
The Nonresident Alien Tax Specialist will ensure the tax compliance documents are completed correctly, determine if any treaty benefits are available, and assist the employee to apply for a Social Security Number if applicable.
To Top
What if the NRA employee does not have a Social Security Number?
A Social Security number is not required from nonresident employees before they are allowed to begin work. However, a Social Security number is required before a foreign employee can benefit from a tax treaty exemption from withholding.
On July 1, 2002, the Social Security Administration (SSA) was mandated to verify Social Security number applicants with a U.S. Citizenship and Immigration Services (USCIS) database. While modifications are being made to the system to provide for more expeditious review, this process currently may take several weeks.
The employee's SEVIS record status must be ACTIVE before an employee attempts to apply for a Social Security Number. F-1 and J-1 students can verify the status of their SEVIS record by logging in to myglobal.umsl.edu with their SSOID. The Social Security Administration requires proof of employment as well as verification of immigration status. Procedures to make the application process go as smoothly as possible have been implemented and are outlined in the Social Security Letter menu item at myglobal.umsl.edu under the Requests & Documents tab.
To Top
What must departments do when making payments through Accounting to NRA's?
Accounting will not be processing any payments for nonresident aliens except those that are for a reimbursement of business-related expenses in accordance with the "accountable plan."
All payments made to nonresident aliens other than wages and scholarships paid through Financial Aid must go through the Nonresident Alien Taxation Specialist and are to be submitted on the form UM-140 Off-Cycle Payment Request which can be found at https://www.umsystem.edu/ums/fa/management/records/forms/human/.
See procedures for scholarship, prize, and honorarium recipients directly below.
1. Departments submit the scholarship information to Financial Aid so the amount is applied directly to the student account (MyView) or
2. Departments submit forms a UM-140 to the NRA Taxation Specialist so the payment is processed through PeopleSoft Payroll. (This is for scholarship recipients who are not enrolled students.
Nonqualified scholarships are taxable income to both nonresidents and U.S. students. A taxable scholarship is any amount greater than the semester academic fees or amounts provided directly to the student in the form of cash or a check. Nonqualified scholarships made to NRA students who have completed the Tax Assessment Intake Form process will generally be taxed at a maximum of 14% unless a tax treaty exemption applies. If there is no tax assessment on file, withholding will be at 30% (required).
All NRA recipients must be provided with the Tax Assessment Intake Form immediately following the departmental scholarship decision to facilitate completion of the tax assessment process.
Students who have already completed the tax assessment process do not need to submit the Tax Assessment Intake Form again.
What is the procedure for prizes and awards?
Prizes and awards are always considered U.S. source income for NRA's, and withholding of U.S. taxes is required at 30% unless a tax treaty applies and the recipient has either a U.S. Social Security Number or Individual Taxpayer Identification Number (ITIN).
Recipients may complete and submit the Tax Assessment Intake Form from anywhere in the world, and may submit copies of passport and identification documents via e-mail as a scanned attachment.
Departments must provide a completed UM-140 and Tax Assessment Intake Form for each prize recipient.
What is the procedure for honorarium payments?
1. Before arrival of the NRA, departments should contact the NRA Tax Specialist at webbjj@umsl.edu with general information about the NRA and the nature of honorarium payment(s). This will maximize tax benefits and allow anticipation of withholding amounts by both the department and the NRA. Withholding will be 30% in the absence of tax treaty benefits.
2. The NRA must complete and submit the Tax Assessment Intake Form, which can be downloaded as a pdf here. To expedite the process, the form can be completed prior to arrival in the United States. Visa information will be incomplete at that time, so the NRA should estimate planned arrival and departure dates and immigration status for purposes of the form submission.
3. After arrival of the NRA, an appointment must be scheduled with the NRA Taxation Specialist and the NRA. The NRA must bring the following documentation to the appointment:
a. Passport and all immigration documents (to verify eligibility for honorarium payment).
b. Evidence of SSN or ITIN, copy of application already submitted, or completed IRS W-7 (provided by the UMSL NRA Taxation Specialist).
4. Prior to the arrival of the NRA, if possible, the department must submit to the NRA Taxation Specialist the following documentation:
a. A copy of the contract signed by both Business Services and the NRA (if the amount of the honorarium requires a contract).
b. A completed UM378 (Supporting Statement for Honoraria and/or Reasonable Business Expenses Provided to a Nonresident Alien Admitted to the US.....).
c. A completed UM-140 (no voucher is required for payments of this type).
5. During the tax assessment appointment, eligibility for tax treaty and other exemptions will be determined and appropriate forms will be printed, signed by the NRA, and forwarded to the IRS as needed.
6. Honorarium payments may be made only to a nonresident alien who is in an immigration status that legally allows such payments. These statuses generally include persons in B-1, B-2, WB, and WT status. Currently, individuals in these statuses may be paid honorarium and associated expenses if their service to UMSL does not last more than 9 days and they have not been paid similar payments by more than 5 other U.S. institutions in the 6 months prior to arrival at UMSL. To Top
How does the nonresident file their tax return?
A. Nonresidents living in St. Louis may seek tax return assistance through the UMSL NRA VITA site each spring, according to information that will be provided at the Tax Assistance page available here at the beginning of each calendar year.
B. Nonresidents outside St. Louis will be provided assistance via e-mail whenever possible. Prior to leaving St. Louis, students and researchers with income must provide a forwarding address to the NRA Taxation Specialist to ensure timely delivery of Forms W-2 and 1042-S.
C. Persons who are outside the United States on April 15 have until June 15 to file their tax return.
How do I pay for services performed outside the U.S.?
Services performed outside the U.S. by a nonresident person or a non-U.S. entity are not taxable or reportable in the U.S. However, it is necessary to have the payee complete a W-8BEN (individuals) or a W-8BEN-E (entities) to avoid withholding U.S. income tax. Send the W-8BEN or W-8BEN-E along with all relevant information to the Nonresident Tax Specialist for review. Attach all documents and approval to correspondance with Shared Services for payment.
What issues arise with software agreements?
Software agreements can be extremely complicated and generally require a review of the license agreement. Normally, they will fall into one of two categories.
A. Purchase: If software is purchased "off-the-shelf" and can be used perpetually with no additional payments to the company, it is treated as a purchase of tangible goods and does not require tax withholding or reporting.
B. Lease: In general, if the payment is to "use" a software product for a specified period of time the IRS treats it as a lease or rental of the software rather than a purchase. This normally requires tax withholding and reporting.
What if the software service or database you want to access is physically stored on a server outside the U.S.? In this situation, the IRS has held that the payment may be considered "foreign source" and not taxable or reportable in the U.S.
In all cases, an IRS Form W-8BEN-E will be needed if the vendor is not a U.S. company.
How do a pay the U.S. agent of a nonresident person?
Treasury Regulation 1.1441-1(b)(2)(ii) (effective January 1, 2001) requires that a payment to the U.S. agent of a "foreign person" MUST be treated as if that payment were made directly to the foreign person regardless of who the payment is actually made to. This means that all information needed for payment the nonresident payee will still be needed and all tax reporting will be sent to that nonresident person as if the payment were made directly to them. Paying the agent rather than the individual can be done, but is normally more complicated than paying the individual directly.
To Top
How can I learn more about the NRA taxation process at UMSL?
Contact the NRA Taxation Specialist at webbjj@umsl.edu to schedule a presentation for department or division personnel that is tailored to your NRA needs.
To Top | Taxes Home
To read Acrobat (.pdf) files, you will need to download Adobe Reader at http://www.adobe.com/products/acrobat/readermain.html.
