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.
Payments to foreign vendors for services performed abroad are not subject to tax withholding or reporting. The Form T-100, Statement for Independent Personal Services Performed for Yale University Outside the United States and/or Form W-8BEN (W-8BEN-E for entities) are required in order to establish location of activity and tax residency.
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 Tax Department if you have questions: phone (203) 432-5597 or (203) 432-5530 or email Daysi Cardona.