Frequently Asked Questions - Tax

Your residency status for tax purposes is separate from your designation for immigration purposes. You might qualify as a resident for tax purposes while remaining a non-immigrant alien for immigration purposes. If you are present in the U.S. on a temporary visa, you might be a resident alien for tax purposes, a non-resident alien, a non-resident alien who is eligible to elect to be taxed as a resident, or a dual-status alien.

Documentation is required for two reasons: to verify that the payment recipient’s visa status allows them to receive payments and to determine the recipient’s tax obligations.

The immigration documents are required to confirm the foreign visitor can receive payments from the University. U.S. immigration regulations prohibit or limit payments to certain visa statuses.

According to Internal Revenue Service (IRS) regulations, a foreign person is subject to U.S. tax on their U.S. source income. Payment made to or on behalf of a foreign person who is considered a nonresident alien is subject to 30% federal tax withholding. The IIF and/or Form W-8BEN (W-8BEN-E for entities) are required in order to determine the foreign payment recipient’s U.S. tax residency (e.g. resident alien or nonresident alien) so that the University can meet tax withholding requirements.

The payment recipient will be able to tell you their visa status since they had to apply for the visa prior to arriving in the U.S. Keep in mind that visitors from visa waiver countries do not have a visa: they can enter the U. S. with only their passport and either a visa waiver for business (WB) or a visa waiver for tourism (WT). They must check the correct visa status when they complete the International Information Form (IIF).

Payment recipients visiting from another institution will likewise already have a visa sponsored by that other institution. Please request their visa status and review the Payment Planning Tool for Individuals to verify that the payment is permissible.

Citizenship is the status of being a citizen of a country: you have the right to live there, work, vote and pay taxes.

You are considered a tax resident of a country where you are required to pay taxes, whether or not you are a citizen there. This may vary depending on the specific requirements of the country.

A foreign individual who does not have a Social Security Number (SSN) and wants to claim tax treaty benefits must have an ITIN. They can apply for an ITIN on Form W-7, Application for IRS Individual Taxpayer Identification Number. It takes the IRS approximately 4-6 weeks to process the application. If a tax treaty benefit is claimed based on the ITIN application (i.e., before the ITIN is actually issued), it is the responsibility of the International Tax Department to follow up with the visitor and to obtain the ITIN before year-end reporting.

Note: If the foreign vendor does not want to claim treaty benefits or he comes from a non-treaty country, he does not need to apply for an ITIN.

To apply for an ITIN, submit the original Form W-7 along with notarized copies of the foreign vendor’s passport including the I-94 Record and visa stamp and a copy of Form 8233 to the IRS at the address listed on the Form W-7 instructions. On Form W-7 under “Reason you are submitting Form W-7”, check boxes a and h. In the dotted lines next to h write “Exception 2” along with the treaty country and the relevant article number.

If submitting a payment transaction with the anticipation of receiving an ITIN from the IRS for a vendor, include a copy of the Form W-7 with the payment request.

Contact the International Tax Department if you have questions at internationaltax@yale.edu.

For a specific University business trip, the primary country of activity is the country related to the primary purpose of the trip. With respect to a trip involving travel to more than one country, please also indicate the country which represents the secondary purpose of the trip.

While we recognize that individuals may conduct multiple activities in a country, we are requesting only the primary purpose for traveling to the primary country and likewise, if more than one country is visited on a trip, we are also requesting the primary activity for traveling to the second country. We are NOT asking for any information beyond the first two primary countries visited and the primary activities conducted in each of those countries.

Yes, travel expenses incurred in the U.S. are considered international expenses if the expenses relate to travel to or from outside the U.S. to conduct an activity outside the U.S. For example, a limo ride from New Haven to JFK to catch a flight to London to speak at a conference is treated as an international expense.

No, these expenses, even those incurred outside the U.S. or related to a non U.S. individual, would not be considered related to an international activity and should be considered domestic expenses.

Expenses incurred in the U.S. are generally not considered international expenses. However, if the expenses relate to goods or supplies that will be used outside the U.S., the expenses will be considered international expenses. For example, the cost of books or supplies that are purchased in the U.S. and that will be used outside of the U.S. for an international activity are considered international expenses.

You should select the activity listed that most closely matches the activity for the country visited. If the activity is not listed then select the activity “Other mission related activities”. There is no wrong answer. You should use your best judgment in selecting the activity.

All expenses related to activities conducted in the U.S., including travel expenses from and back to the United Kingdom should be classified as domestic. However, expenses related to the activities of the consultant while in the United Kingdom or other countries should be classified as international expenses.

Someone might want to ask – “Where will the activity be performed or conducted?” If the activity will take place in the U.S., then the costs or expenses relating to that activity should be classified as domestic including all costs and expenses to travel to and from the U.S. If the activity will take place outside of the U.S., then the costs or expenses relating to that activity should be classified as international, including travel expenses to and from the non U.S. location.

Expenses relating to Canada and Mexico should be classified as an international Report Type. However, if these expenses include travel, you must use the domestic expenditure types in order to comply with federal agency guidelines.

If you previously claimed exemption from Connecticut tax withholding, you are required to update your state tax withholding form CT-W4 each year, before February 16th, you should have received an email notice from Employee Service Center. You can update your form CT-W4 in Workday, if you need assistance contact employee.services@yale.edu.

Please contact the Employee Service Center to update your personal information in Workday (i.e., primary nationality, citizenship status). You may also refer to Workday instructions.

For an individual to be exempt from FICA tax under IRS section 3121(b)(19), the individual must be: A nonresident alien; Present in the U.S. under an F, J, M, or Q immigration status; Performing services in accordance with the primary purpose of their immigration status (e.g., under the “-1” status and legally employed).

If you meet all the above criteria, you can request a refund. Contact internationaltax@yale.edu for assistance.

The taxable portion of your stipend will have a 14% federal tax withholding. The reduced tax rate of 14% requires that the grantee be (i) a nonresident alien temporarily present in the U.S. under an F, J, M or Q immigration status (either “-1” primary status or the “-2” dependent status) and (ii) the recipient of the stipend, scholarship or fellowship grant. Stipends, scholarships and fellowships are considered non-service payments.

The IRS regulations state that scholarship and fellowship payments will be “sourced” based on the location of the payor; except when the U.S. based payor makes payments to a nonresident alien to study or conduct research outside the U.S.; these payments are treated as “foreign source income”, not subject to tax withholding or reporting to the IRS.

Once you complete the Sprintax Calculus application and it is determined a tax treaty applies, you are required to sign and upload Form 8233, Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. Federal tax exemption is valid 10 days after the International Tax Department submits the form to the IRS.

Federal taxes are not deducted from the payment only if the proper treaty form is included with the documents submitted to Accounts Payable, prior to the payment. Norway does have a tax agreement with the U.S. for independent personal services, Article 13. Since the lecturer already received the payment, at this point he can claim the tax refund, pursuant to the treaty when he files his income tax return for the year in question (Form 1040NR, if nonresident alien). He will receive Form 1042-S from the University stating the amount of the payment as well as the taxes withheld. The University cannot refund taxes properly withheld at the time of payment.

No, the primary purpose of a J-2 status individual is to accompany the spouse or dependent (i.e., J-1). Tax treaties don’t apply, your wife is subject to federal tax withholding.

The existence of an income tax treaty does not mean that you will automatically qualify for the tax exemption. You must meet the qualifications for the tax exemption as set forth in the tax treaty, you also need to file the appropriate forms in a timely fashion.

A foreign individual who does not have a Social Security Number (SSN) and wants to claim tax treaty benefits must have an ITIN. They can apply for an ITIN on Form W-7, Application for IRS Individual Taxpayer Identification Number. It takes the IRS approximately 6-8 weeks to process the application. If a tax treaty benefit is claimed based on the ITIN application (i.e., before the ITIN is actually issued), it is the responsibility of the department to follow up with the visitor and to obtain the ITIN before year-end reporting and communicate with the International Tax Department immediately.

Note: If the foreign vendor does not want to claim treaty benefits or he comes from a non-treaty country, he does not need to apply for an ITIN.

To apply for an ITIN, please refer to the Form W-7 instructions.

If submitting a payment transaction with the anticipation of receiving an ITIN from the IRS for a vendor, include a copy of the Form W-7 that was submitted to the IRS, with the payment request.

Contact the International Tax Department if you have questions at internationaltax@yale.edu.

Citizenship is the status of being a citizen of a country:  you have the right to live there, work, vote and pay taxes.

You are considered a tax resident of a country where you are required to pay taxes, whether you are a citizen there.  This may vary depending on the specific requirements of the country.

The payment recipient will be able to tell you their visa status since they had to apply for the visa prior to arriving in the U.S. Keep in mind that visitors from visa waiver countries do not have a visa: they can enter the U. S. with only their passport and either a visa waiver for business (WB) or a visa waiver for tourism (WT). They must check the correct visa status when they complete the International Information Form (IIF).

Payment recipients visiting from another institution will likewise already have a visa sponsored by that other institution. Please request their visa status and review the Payment Planning Tool for Individuals to verify that the payment is permissible.

Documentation is required for two reasons: to verify that the payment recipient’s visa status allows them to receive payments and to determine the recipient’s tax obligations.

The immigration documents are required to confirm the foreign visitor can receive payments from the University. U.S. immigration regulations prohibit or limit payments to certain visa statuses.

According to Internal Revenue Service (IRS) regulations, a foreign person is subject to U.S. tax on their U.S. source income. Payment made to or on behalf of a foreign person who is considered a nonresident alien is subject to 30% federal tax withholding. The IIF and/or Form W-8BEN (W-8BEN-E for entities) are required in order to determine the foreign payment recipient’s U.S. tax residency (e.g. resident alien or nonresident alien) so that the University can meet tax withholding requirements.

Payments to foreign vendors for services performed abroad are not subject to tax withholding or reporting. The Form W-8BEN (W-8BEN-E for entities) are required in order to establish location of activity and tax residency.

Your residency status for tax purposes is separate from your designation for immigration purposes.  You might qualify as a resident for tax purposes while remaining a non-immigrant alien for immigration purposes.  If you are present in the U.S. on a temporary visa, you might be a resident alien for tax purposes, a non-resident alien, a non-resident alien who is eligible to elect to be taxed as a resident, or a dual-status alien.