Homeland Security and the Internal Revenue Service (IRS) defines a Nonresident Aliens (NRA) as any individual who is not a U.S. citizen or U.S. national. This page contains information on paying NRAs and corresponding tax details.
Who is a Nonresident Alien (NRA)
The Substantial Presence Test (SPT) Form is a criterion used by the Internal Revenue Service (IRS) in the United States to determine whether an individual who is not a citizen or lawful permanent resident in the recent past qualifies as a “resident for tax purposes” or a “nonresident for tax purposes”; it is a form of physical presence test. The SPT should be used in conjunction with the green card test (the criterion that the individual possessed a valid green card at any time of the year). An individual who satisfies either one or both of these tests is treated as a resident for tax purposes.
If a person is not sure whether they are a U.S. Person or a Nonresident Alien, please have them complete and sign the Substantial Presence Test Form, then submit it to the paying department along with their required immigration and payment documentation.
Process and documentation required to pay a Nonresident Alien
For services performed outside the United State and its territories
If services are performed by Nonresident Alien (NRA) outside the United States, the services are considered Non-U.S. Source Income and you must follow the instructions and policy at Non-U.S. Source Income (Foreign Source Income).
For services performed in the United States and its territories
If services are performed by a Nonresident Alien (NRA) within the United States and its territories, the payments are considered U.S. Source Income and there are strict/no exception requirements that must be met in order to make a payment.
When paying either (1) an agent, or (2) foreign company who sends a representative to perform the service in the United States, the UW is required to obtain:
- Immigration documents for the individual performing the services in the United States
- Applicable tax treaty forms for the individual performing the services in the United States
- Payments may be made to the agent or foreign company
Follow the steps below for each Nonresident Alien (NRA) guest performing services in the United States and its territories
Process flowchart: Process and Document Flowchart for Non-Scholarship/Fellowship Payments. Includes U.S. Individual Taxpayer Identification Number (ITIN) application process is a process flow chart of the above steps for payment to a Nonresident Alien (NRA) guest performing services in the United States and its territories.
Tax treaties: For Non-Employee payments made through Accounting Services: Independent Contractors and Scholarships by Country.
- Note: For tax treaty purposes, Research Participant payments are considered Independent Personal Services.
- Note: The United States–People’s Republic of China income tax treaty does not apply to Hong Kong, Macau, or Taiwan.
For employee payments, please contact your divisional payroll office.
Visa restrictions: See Visa Restrictions and Resources.
All non-payroll payment to Nonresident Aliens (NRA) require tax withholding at rates as follows, unless a tax treaty between the Nonresident Alien (NRA)’s country and the United States applies to the payment. Below are applicable tax rates by payment types:
- Scholarships/Fellowships: 14%
- Non-scholarships/fellowships, except royalties: 30%
- Royalties: See IRS Tax Treaty Table 1
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Calculation of amount withheld
Federal tax must be withheld at the rate of 30% of gross pay unless a tax treaty is applicable to the type of payment being made. Withholding on scholarships and fellowships is reduced to 14%. Withholding rates may also be reduced according to tax treaties, and many tax treaties entirely exempt scholarship and fellowship payments.
Federal tax calculation is made by Accounting Services audit staff or by a division. The following examples demonstrating calculation of amounts withheld are presented here for UW internal staff information only:
- Example 1. A royalty is paid in the amount of $1,000 to a resident of Paraguay. The United States does not have a tax treaty with Paraguay and the recipient has not claimed exemption from withholding, so withholding is at the rate of 30%. Accounting Services withholds $300 (30% of $1000) and remits it to the IRS. A check for $700 is mailed for the royalty payment.
- Example 2. A royalty is paid in the amount of $1,000 to a resident of Latvia. According to the tax treaty between the United States and Latvia, royalties are subject to a 10% reduced withholding rate. The recipient has filed form W-8BEN to claim the lower rate. Accounting Services withholds $100 (10% of $1000) from the payment.
- Example 3. A resident of Nigeria performs services for a university department in the amount of $1000 over a period of 10 days. The United States does not have a tax treaty with Nigeria and the recipient has not claimed exemption from withholding. Accounting Services withholds $300 (30% of $1000) and remits it to the IRS. A check for $700 is mailed for the services payment.
- Example 4. A $2000 scholarship payment is made to a student who is a resident of Brazil. The United States has no tax treaty with Brazil and the student has not claimed exemption from withholding. Accounting Services withholds $280 (14% of $2000) and remits it to the IRS. A check for $1720 is mailed for the scholarship payment.
Withholding amounts are calculated based on information provided on the payment request documentation (PIR, DP, P.O., etc.). As the examples indicate, withholding depends on a variety of circumstances. Departments can help assure accuracy of withholding amounts by providing complete information on the payment request form and supporting documentation (PIR, DP, P.O., etc.).
A remittance copy of the voucher is produced by Accounting Services with each payment. This document will include a statement to notify the individual that taxes were withheld and remitted to the Internal Revenue Service. A telephone number to contact in case of error will be included.
Refund of over withholding
If the individual believes taxes were withheld from a payment in error, they should contact the Tax Compliance Office (email@example.com). If it is determined taxes were withheld in error, the Tax Compliance Office will issue a refund check to the individual.
Exception: If the error is found after the end of a calendar year that year or for a prior calendar year payment, it will not be possible for the Tax Compliance Office to obtain a refund for the overpayment from the IRS and issue a check to the individual.
The individual would then be required to file a tax return and obtain a refund directly from the IRS. It is very important to immediately contact the Tax Compliance Office about potential errors, especially when payment is made near the end of a calendar year. These errors should be reported to the Tax Compliance Office no later than December 31.
How to apply for the Individual Taxpayer Identification Number (ITIN)
An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service (IRS) for individuals who do have and are not eligible for a Social Security Number (SSN)—such as a foreign national or nonresident alien—but are required to file certain federal tax or information returns. For SSN eligibility, please refer to Social Security Number for Noncitizens.
No individual should have both an ITIN and an SSN.
The ITIN is a nine-digit number always beginning with the number 9 and has a range of 70-88 in the fourth and fifth digit. (Effective April 12, 2011, the range was extended to include 900-70-0000 through 999-88-9999, 900-90-0000 through 999-92-9999, and 900-94-0000 through 999-99-9999.)
ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code (IRC). Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN.
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ITINs are for federal tax reporting only, and are not intended to serve any other purpose. The IRS issues ITINs to help individuals comply with the U.S. tax laws, and to provide a means to efficiently process and account for tax returns and payments for those not eligible for Social Security Numbers (SSNs). For SSN eligibility, please refer to the SSA’s Social Security Number for Noncitizens (PDF).
An ITIN does not authorize work in the U.S. or provide eligibility for Social Security benefits or the Earned Income Tax Credit.
Who needs an ITIN
IRS issues ITINs to foreign nationals and others who have federal tax reporting or filing requirements and do not qualify for a Social Security Number (SSN). (For SSN eligibility, please refer to Social Security Number for Noncitizens.) A Nonresident Alien (NRA) individual needs an ITIN if they are not eligible for a SSN who is required to file a U.S. tax return only to claim a refund of tax under the provisions of a U.S. tax treaty.
Other examples of individuals who need ITINs include:
- A nonresident alien required to file a U.S. tax return
- A U.S. resident alien (based on days present in the United States) filing a U.S. tax return
- A dependent or spouse of a U.S. citizen/resident alien
- A dependent or spouse of a nonresident alien visa holder
If you are being put on UW’s payroll, please ask your school’s divisional payroll coordinator for your taxpayer identification requirements. Also refer to the How to make employee payments webpage to determine if you are considered a UW employee.
If you already have obtained or applied for either an SSN or ITIN, then you are not eligible for the other, as both are U.S. Taxpayer Identification Number. A person is only allowed to have one of these numbers, never both.
How to apply for an ITIN
Important: You cannot apply for an ITIN if you already have an ITIN or SSN, unless:
- your ITIN or SSN is expired and
- you have received notification from the IRS or Social Security Administration that your ITIN or SSN is expired.
By law, an alien individual cannot have both an ITIN and a SSN.
If you have an application for an SSN or ITIN pending, do not attempt to apply again for either an SSN or ITIN.
ITIN application steps
- If you have an employment position currently or an offer for employment this or next term (fall or spring semester), you must apply for a Social Security Number (SSN).
- If you do not have an employment position currently or offer for employment this or next term (fall or spring semester), but are getting a scholarship/fellowship, then you are eligible for the Individual Taxpayer Identification Number (ITIN). If you are eligible for the ITIN, then the following applies:
- Obtain the Designated School Official (DSO) letter through the Terra Dotta form. An international student can access the form by logging in with their NetID login information. (It is not a public access request form since we can only provide the letter for F-1 and J-1 students.) In addition to filling out the fields in the form, students must upload a copy of their scholarship, grant, or fellowship letter, as well as an enrollment verification letter for this semester. There are instructions in the form and on the Registrar’s website for how to download an enrollment verification letter.
- Gather the originals of the following:
- I-94 plus Homeland Security stamp in passport or ESTA and Homeland Security stamp in passport
- I-20 or DS-2019 if on an F-1 or J-1 Visa status
- Letter from the paying department stating the type of payment being made and the amount (Invitation or Fellowship/Scholarship Letter)
- Contact and applying directly through the local Internal Revenue Service (IRS) Office. You will need to contact the IRS and set up an appointment to visit their office to apply for the ITIN. See the IRS Office Locator for more information. Please request acknowledgement of application and forward it to your paying department of proof of application. If you apply directly through the IRS, federal taxes will be withheld at the rate of 14% for scholarships/fellowships and 30% for all other payments prior to receiving the ITIN. After the ITIN is received, applicable tax treaties will be granted, if applicable. Tax treaties: For Non-Employee payments made through Accounting Services: Independent Contractors and Scholarships by Country. Note: For tax treaty purposes, Research Participant payments are considered Independent Personal Services.
- If you are not receiving any payments from UW–Madison, then you must file through the IRS. Contact and apply directly through the local IRS Office. You will need to contact the IRS and set up an appointment to visit their office to apply for the ITIN. See the IRS Office Locator for more information.
- You may also apply using the services of an IRS-authorized Acceptance Agent or visit some key IRS Taxpayer Assistance Center. Taxpayer Assistance Centers (TACs) in the United States provide in-person help with ITIN applications on a walk-in or appointment basis. Applicants outside the United States should contact U.S. Tax Attachés in Beijing, Frankfurt, London, or Paris. The IRS’s ITIN Unit in Austin issues all numbers through the mail.
- The IRS never issues ITINs or communicates via electronic media (email, etc.) because all electronic media is unsecured per the IRS and Health Insurance Portability and Accountability Act (HIPAA).
Immigration and tax documentation (includes samples)
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Passports are a document issued to citizens and nationals of a country. They are issued exclusively by the issuing country’s Department of State.
All payments made by UW to a Nonresident Alien (NRA) require a legible copy of the picture page of the passport. The passport must be current and cannot be expired.
I-94 (Issued to non-Visa Waiver Program countries)
An I-94 form is needed by all persons except U.S. Citizens, returning resident aliens, aliens with immigrant visas, and most Canadian citizens visiting or in transit. Air and Sea travelers will be issued an I-94 during the admission process at the port of entry. Visit the I-94 DHS website for more information.
The U.S. Customs and Border Protection (CBP) create an electronic I-94 system and also stamp the passport with an admission stamp containing the date of admission, class of admission, and expiration date.
Although CBP will no longer issue a paper I-94, many employers and government agencies, such as the Department of Motor Vehicles and the Social Security Administration, require a paper version of Form I-94 to verify lawful status and employment authorization. This includes the University of Wisconsin, which requires an I-94 to verify lawful status in the U.S. as part of our payment process.
If the Nonresident Alien (NRA) does not have an I-94, the NRA must retrieve and print out a paper version of their arrival information from Customs and Border Patrols I-94 site. The information should be available online within 24 hours after arrival.
The NRA must provide the paying entity:
- The paper version of their arrival information (I-94), and
- The Homeland Security Stamp in their passport for their current trip to the U.S.
These documents must be attached to all the Accounting Services payment request form and supporting documentation (PIR, DP, P.O., etc.), along with the photo page of the passport, and other documents as outlined in Process and Document Flowchart for Non-Scholarship/Fellowship Payments (PDF). Includes U.S. Individual Taxpayer Identification Number (ITIN) application process in order for payments to be processed.
ESTA for Visa Waiver Program countries
If the Nonresident Alien (NRA) is from a Visa Waiver Program (VWP) country they must obtain the equivalent of the I-94, which is the Electronic System for Travel Authorization (ESTA).
The Visa Waiver Program enables nationals of certain countries to travel to the United States for tourism or business for stays of 90 days or less without obtaining a visa. The program was established in 1986 with the objective of promoting better relations with U.S. allies, eliminating unnecessary barriers to travel, stimulating the tourism industry, and permitting the Department of State to focus consular resources in other areas. VWP eligible travelers may apply for a visa, if they prefer to do so. Not all countries participate in the VWP, and not all travelers from VWP countries are eligible to use the program. ESTA Program website for further details on the ESTA program and participating countries.
All VWP travelers must submit an application to U.S. Homeland Security using the Electronic System for Travel Authorization (ESTA). The cost of this application as of 04/20/2011 is $14. The VWP traveler enters their personal information into ESTA and, if approved by ESTA, the VWP traveler is given an ESTA authorization document. This ESTA Authorization document is normally valid for two years at which time the VWF traveler must re-apply through ESTA. The authorization document can also be viewed and printed from the ESTA website by the applicant by entering certain personal information (first name, family name, date of birth, passport number, and country issuing passport).
The NRA must provide the paying entity (1) the paper version of their arrival information (I-94), and (2) the Homeland Security Stamp in their passport for their current trip to the U.S. These documents must be attached to all the Accounting Services payment request form and supporting documentation (PIR, DP, P.O., etc.), along with the photo page of the passport, and other documents as outlined in Process and Document Flowchart for Non-Scholarship/Fellowship Payments (PDF). Includes U.S. Individual Taxpayer Identification Number (ITIN) application process in order for payments to be processed.
A citizen of a foreign country who seeks to enter the United States generally must first obtain a U.S. visa, which is placed in the traveler’s passport, a travel document issued by the traveler’s country of citizenship.
Homeland Security Stamp
Upon granting entry to the United States at the port of entry, the Department of Homeland Security U.S. immigration inspector provides you an admission stamp or paper Form I-94, Arrival/Departure Record in your passport. This indicates how long a person is allowed to stay in the United States and proves that they arrived in the country legally.
Nonimmigrants who arrive in the United States by air or sea should be issued the passport admission stamp.
Nonimmigrants who arrive in the United States by crossing a land border will receive a passport admission stamp.
Form I-20 (Certificate of Eligibility for Nonimmigrant Student Status
All F and M students that study in the United States need a Form I-20, “Certificate of Eligibility for Nonimmigrant Student Status”. Once accepted into a Student and Exchange Visitor Program (SEVP)-certified school, international students will receive a Form I-20 from their designated school official (DSO).
Form DS-2019 (Certificate of Eligibility for Nonimmigrant Student Status)
The DS-2019 Form is a document allowing you to apply for the J-1 Visa as an Intern or Trainee in the USA. The DS-2019 form is also called “Certificate of Eligibility.” It is issued to you by CICD, a US Department of State-designated sponsor organization.
Form DS-2019, “Certificate of Eligibility for Exchange Visitor (J-1) Status” is a Department of State controlled document that can only be produced through the Student and Exchange Visitor Information System (SEVIS). SEVIS is the Department of Homeland Security database developed to collect information on the F, M, and J visa holders. The Form DS-2019 is the basic document required to support an application for an exchange visitor visa (J-1). It is a 2-page document. Foreign nationals are required to sign page one of the form agreeing to the instructions and certification language relating to participation in the exchange program found on page two.
No blank SEVIS forms exist. Each Form DS-2019 is printed with a unique identifier known as a “SEVIS ID number” in the top right-hand corner, which consists of an “alpha” character (N) and up to 11 numerical characters (E.g. N0002123457).
The Form DS-2019:
- Identifies the participant (block 1);
- Identifies the sponsor (block 2 and block 7, which contain the name, signature and telephone number/address of the sponsor’s responsible officer);
- Provides a brief description of the program activity to be completed by the participant (block 2);
- Identifies the beginning and end dates of the program (block 3) and the program category (block 4); and
- Provides a breakout of the total estimated financial support to be provided to the participant during his or her program (block 5).
Invitation Letter Sample
An invitation letter is a letter issued the paying entity in the United States to the visiting Nonresident Alien (NRA) in which the details of the visit and any associated payments are outlined. This letter should be issue to all Nonresident Aliens (NRA) in order for them to take it to the United States embassy or consulate to apply for and obtain a visa to enter the United States.
Below is a sample invitation letter to be used for Nonresident Alien (NRA) guests coming to the UW to be guest speakers/presenters at events. Please customize the letter with your department letterhead, etc.
[Enter Date Here]
Dear Honored Guest,
The University of Wisconsin is pleased to invite you to be a guest speaker at the [Enter Event Name Here]. As part of this invitation, the University of Wisconsin will be providing you a payment for services (Honorarium) in the amount of $[Enter Amount here]. The UW will also reimburse you for travel expenses including airfare, lodging, and meal based on our Travel Accountable Plan.
In order to receive the above payments, you are required to obtain the appropriate Visa from the United States Embassy in your country. Please visit or call the United States Embassy in your country and take this letter of invitation with you. Based on the letter please ask for a B-1 (Business) Visa for your trip to the University of Wisconsin. Please consult the United States Embassy in your country for appropriate lead time required to obtain your visa as lead time varies from country to country.
If you are from a Visa Waiver Program (VWP) Country this program allows citizens of participating countries to travel to the United States without a visa for stays of 90 days or less, when they meet all requirements. Travelers must be eligible to use the VWP and have a valid Electronic System for Travel Authorization (ESTA) approval prior to travel. If you are eligible to travel on the VWP, but prefer to have a visa in your passport, you may still apply for a visitor (B) visa. To determine if you are from a Visa Waiver Country please visit https://esta.cbp.dhs.gov/esta/ for a description of the program and a listing of the countries participating in this program and the Electronic System for Travel Authorization (ESTA) requirements you must complete before you come to the United States.
Once you get to the United States, the University of Wisconsin host department will need to see your original (1) passport and (2) I-94 or ESTA Authorization if from Visa Waiver County. Please provide the originals to the paying department and they will make copies of these documents. The department may also request other payment documents, such a receipts, etc. which they will inform you of prior to your visit to the University of Wisconsin.
We hope you accept this invitation and are looking forward to having you at the University of Wisconsin.
[Enter Department Signature, etc. here]
Global Entry Program Receipt
The Global Entry Program is a program of the U.S. Customs and Border Protection service that allows pre-approved, low-risk travelers to receive expedited clearance upon arrival into the United States via the SENTRI and NEXUS lanes and through automatic kiosks at select airports.
All payment made by the UW to a Nonresident Alien (NRA) using the Global Entry Program require a legible copy of the Global Entry Program receipt obtained at the Global Entry Program kiosk at the airport. This receipt can be used in lieu of the I-94 if travel did not obtain an I-94 when entering the U.S.
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