Procedure
Foreign nationals are required to fill out taxation forms. These forms are used in determining the appropriate method of taxation and withholding. There are certain rules and regulations that are applied to each foreign national to determine which forms should be completed.
Forms and Instructions
The following forms are issued by Payroll Services to foreign nationals affiliated with the University as employees, independent contractors, and scholarship/fellowship recipients (More detailed information is provided for each of these foreign national affiliates in subsequent policies). The information contained in the forms is used for tax reporting requirements.
1. IRS Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding
IRS tax regulations require that certain payments be reported to the nonresident alien recipients after each calendar year on IRS Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. This form is issued to the following nonresident aliens:
- Employees using a tax treaty for withholding exemption
- Independent contractors
- Scholarship/fellowship recipients
2. IRS Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
IRS Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, is used by Payroll Services to report to the IRS the income tax withheld on payments made to:
- Nonresident alien scholarship/fellowship recipients
- Nonresident alien independent contractors
3. Individual Taxpayer Identification Number (ITIN)
Individuals who are ineligible to obtain a Social Security number but are required to report their income must apply for an ITIN with the IRS. The ITIN is a nine-digit number used for tax purposes only.
According to the American Competitiveness Workforce Act of 1998, B-1 and WB visa holders may receive payment of honoraria and associated incidental expenses for "usual academic activity," if paid by a United States institution of higher education or by a nonprofit or governmental research organization. Under this act, an academic activity may not exceed nine (9) days at a single institution. In addition, such visa holders cannot have accepted honoraria and/or incidental expenses from more than five such institutions or organization in the previous six-month period. The signed and dated Certification of Academic Activity Form should be forwarded to Payroll Services with other appropriate forms to process such a payment.
Forms, Instructions, and Publications for Foreign Nationals from the Internal Revenue Service (IRS)
Related Requirements
External Regulations and Consequences
None.
University Policies, Standards, and Procedures
- Finance Policy 1116 - University of North Carolina at Chapel Hill Policy on General Overview of Tax Issues for Foreign National Students and Scholars
- Finance Policy 1117 - University of North Carolina at Chapel Hill Policy on Foreign National Employees
- Finance Policy 1119 - University of North Carolina at Chapel Hill Policy on Foreign National Scholarship/Fellowship Awardee
- Finance Policy 1120 - University of North Carolina at Chapel Hill Policy on Tax Status of Foreign Nationals
- Finance Policy 1121 - University of North Carolina at Chapel Hill Policy on Social Security Tax Withholding for Foreign Nationals
- Finance Policy 1122 - University of North Carolina at Chapel Hill Policy on Federal and State Income Tax Withholding for Foreign Nationals
Contact Information
Primary Contact(s)
| Subject |
Contact |
Telephone |
Fax |
E-Mail |
| Tax Issues |
Payroll Services |
919-962-0047 |
|
payroll@unc.edu |
History
Revised: