... Non-U.S. Citizen Contractors

Non-U.S. Citizen Independent Contractor Process

Non-Resident Alien (NRA) Policy
A. The transaction for Non-resident Alien outside service individuals must comply with Internal Revenue Services and Immigration & Naturalization Service process.
Individuals who are invited to UTHSC-H for the purpose of an employment interview, consultation or a presentation, etc may be reimbursed for allowable travel expenses.  These expenses must comply with UTHSC-H travel policy as stated in the travel guide.
 
Non-resident sponsored by other Universities must have permission to travel and receive daily services fees. 

Vendor Request Process

Department must process request for vendor code for Non-resident alien independent contractor. Departments are responsible to obtain accurate information from the visitor prior to submitting vendor code request. All NRA visitors should be reported to International Office (INT). The INT office will verify if you are able to process a legal payment prior to vendor setup.

• Complete vendor code request electronic form is found in the travel website.
• Non-resident alien do not require a Social Security Number (SSN).
• Foreign country should be answered "yes" only if it applies. Foreign address may also be a US citizen living in a foreign country and those also require a social security number.
• Department processing Non-resident alien may be contacted by the Expense Reimbursement Team (ER) to discuss specifics (Visa status, what will be paid to whom, when will visitor be here, duration of stay etc.)

Travel Arrangement Option

Department have the option of processing ‘third party " payment.          

• Airfare should be processed through the BTA process with our contracted travel agency, Corporate Travel Planners.
• Departments may have the visitor stay with a contracted hotel and have the Hotel direct bill the Department. Payment to the hotel would be processed on a Request for Issuance of a check.

Submission of NRA Payment                                  

 Upon completion of the service, payment to the individual is requested by submitting to the Accounting Department a "State of Texas Purchase Voucher" signed by the person performing the service or by two senior administrative officials within the respective department. The "State of Texas Purchase Voucher" must show itemized expenses and be accompanied by original receipts and/or any other documentation necessary to support the expenses.    

• NRA requires an 8233 form signed. See Form 8233. (Exhibit A) Failure to sign this form results in a 1% penalty.
• Completion requires copies of Visa Status, if country requires no Visa to travel to the U.S., they require an I-94 to enter the country from INS. A copy of I-94 is required.
• Incomplete Visa status will require department to assume responsibly for additional INS penalties.
• Service fees are subject to 30% withholding of Federal Income Tax (FIT). ER Team determines net amount submitted by the department. See formula chart Exhibit B.
• ER Team will use formula (see formula Exhibit B) to determine payment if gross amount is paid to independent contractor. Foreign source income is not taxable.
• ER team maintains manual file of all payments and tax deposit payments to Non-resident aliens.
• Expense Reimbursement Team processes Form 1042 Electronic Federal Tax Payment System (EFTP).
• Cash Management & Investments Team processes 1042s (EFTP) they will process a (JV) journal voucher to hit the appropriate funds. See Exhibit E

At calendar yearend, ER Team and Payroll processes1042s spreadsheets. Payroll is responsible for processing 1042s form.  Once completed ER Team mails the forms to appropriate NRA.

• NRA is responsible for filing his own taxes.
• See example form of 1042s mailed to NRA see Exhibit table F.

Customer Service Option

ER Team has acceptance agent available to file for ITIN Identification Tax Payer ID Number. See W-7 form application and instruction for applying ITIN exhibited

• ITIN are required to file exemption. See 8233 form exhibited A.

Abbreviation: (NRA) Non-resident alien, (INT) International Office room 130 (SSN) Social Security Number, (ER) Expense Reimbursement Team, (FIT) Federal Income Tax, (EFTP) Electronic Federal Tax Payment System, (JV) Journal Voucher.

Federal Income Tax Withholding: Payments to non-resident alien
independent contractor

What are our options regarding how UT-HSC must withhold federal income tax (FIT) on a $1,000 payment to a Non-Resident alien Independent Contractor?

Option 1 - Withhold Fit from a $1000 payment to/for a Non-Resident Alien Independent contractor.

Full Amount	Tax	Pay to/for NRA
100%	30%	70%
$1000.00	$300.00	$700.00

Option 2 - Pay to/for a NRA Independent Contractor $1,000.00 then pay FIT on the full $1000.00.

Full Amount	Tax	Pay to/for NRA
100%	30%	70%
$1428.00	$428.57	$1000.00

So the question you have to determine is: Do you want to have the tax withheld from the payment (s) – as in Option 1. Or do your want to pay a fixed amount, and then pay the tax on that amount – as in Option 2.