Lecturers, guest speakers and performing artists providing up to $2,500 in services of a short duration (less than six consecutive days) may be paid through the honorarium process without a contract. Please refer to the State Accounting Procedures Manual to determine if the Honorarium process can be used to pay your lecturers, guest speaker or performing artist. Honorarium payments to U.S. people are handled by Accounting. The procedures outlined below apply only to payments to nonresident alien, foreign nationals.
Honorarium payments to foreign nationals who are nonresident aliens for tax purposes must be paid through Payroll. Additional information will be required, as outlined below.
Guidelines for Payments to Non-US Citizens
Any payments issued to a non-US Citizen may be subject to different IRS reporting and withholding requirements than payments issued to US Citizens and US Permanent Residents. It is imperative that you and your payee understand the process up front so there are no false expectations. Payments to a nonresident alien (employees and non-employees) will be processed through Payroll due to reporting and/or tax withholding requirements. A variety of factors specific to the individual situation will determine the treatment of the payment. Factors to be considered include the type of payment, source of funding, location of services, visa type, US residency status for tax purposes, applicable tax treaties and tax rates.
Eligibility for Honorarium Payment
Only individuals entering the US under certain Visa classifications (or waivers) are eligible to receive an honorarium payment. Typical for speakers coming to the US:
B-1/VWB* Visitor for business/Visa Waiver for Business
B-2/VWT* Visitor for tourism/Visa Waiver for Tourism
J-1 Short-term or Research Scholar
Note: H-1B - NOT ELIGIBLE
*There are restrictions for academic activities under the American Competitiveness and Workforce Improvement Act of 1998 for visitors:
Working with Human Resources prior to arrival will help ensure the best possible outcome. Likely the individual will need to meet with a Human Resources representative to complete taxation related paperwork.
Residency status for tax purposes, tax rates, and tax treaties
Human Resources will determine your guest’s residency status for tax purposes based on their completion of the Residency Determination for Honoraria. Foreign nationals receiving honoraria typically are present in the US for a short period of time and will be a non-resident alien for tax purposes.
Additional information about the residency determination and taxes can be found on Payroll's Nonresident Alien Tax page.
Honoraria payments to a non-resident alien are subject to 30% tax withholding unless exempted in part or in whole by a tax treaty. For those from countries with a tax treaty with the US, an Individual Taxpayer Identification Number (ITIN) issued by the IRS or a US Social Security Number is required to claim tax treaty benefits at the time of payment. Typically foreign guests arrive with neither; therefore, treaty benefits must be claimed with their tax return filing.
Individuals who have been present in the US for a period long enough to meet the Substantial Presence Test will be Resident Aliens for tax purposes and will be treated the same as US people with regard to taxation. Human Resources will determine their status using the Residency Determination for Honoraria form. If this is the case, the request will be forwarded to Accounting for payment with no tax withholding required. Note: this does not mean the payment is non-taxable, just that withholding is not required.
Procedure for Payment of Honoraria
Prior to engagement:
At the time of engagement for nonresident alien:
*Honoraria payments to a non-resident alien will be taxed at 30%. Payee’s from countries with applicable tax treaties can claim those benefits when filing a US tax return which may entitle them to a refund of all or a portion of the tax withheld. A guide to filing a tax return and claiming tax treaty benefits is available at www.irs.gov.