For tax purposes an honorarium recipient is generally considered an independent contractor and their payments can be subject to withholding tax rates unless the scholar/speaker qualifies for tax treaty benefits.
There are several factors used to determine the taxability of these payments, such as, but not limited to, U.S tax treaties with the visitor's country of residency, the 9/5/6 rule mentioned above, and the type of visa of the scholar/speaker.
Under the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA), section 431, it is now possible, if certain conditions are met, to pay honoraria to visiting scholars in B-1, B-2, or visa waiver (WB or WT) status.
- An honorarium is a payment that can be of any dollar amount and is typically a fee paid to an international scholar/speaker who meets the following conditions;
- The honorarium must be given for "a usual academic activity or activities"
- Visit to UNCW campus is equal to or less than 9 days AND
- the international speaker/scholar to whom the honorarium is paid must not have accepted payment or expenses from more than 5 institutions or organizations in the previous 6 month period.
- Visitor is on a B or VWB - visa waiver ( Canadian visitors - passport only)
- NOTE: Honorarium payments are subject to a 30% federal income tax withholding or 34% if the payment is greater than $1500 (NC 4% withholding tax).
The following is a list of information the Tax Compliance Office will need from the scholar/speaker to determine the correct taxation of the honorarium payment.
- Compliance Statement, 9/5/6 Rule
- Invitation Letter
- Copies of the I-94 card, if applicable, passport photo page, passport expiration page (if not on photo page), B1 or B2 visa, if applicable.
- IRS Form W-8BEN
- Photocopy of SSN or ITIN
- Complete Purchasing Form PUR 1.40 and route through Ushop
- IRS Form 8233, if applicable, for treaty benefits
- NOTE: A valid U.S. social security number or ITIN number is required to qualify for tax treaty benefits. No exceptions, no SS#/ITIN no tax treaty benefits, (see IRS publication 519, pg. 8)
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