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Payments to Foreign Nationals and Foreign Entities

In accordance with Internal Revenue Code, payments to foreign nationals (employees, students, and visitors) as well as payments to foreign entities may be subject to income reporting and tax withholding that differs from that for domestic employees, students, and U.S. entities.

Click the links in the sidebar for specific information on each topic. In addition, the website contains information useful to this segment of the SMU family.

Nonresident Alien Terminology

Alien Determination of Residency (ADR) Form

Utilized by SMU's Foreign Nationals Office to solicit immigration details from a foreign national who is an SMU student or employee. This information is used to complete a review of the foreign national's visitation history in the U.S and determine his residency status for tax purposes.

Fellowship

An amount paid or allowed to, or for the benefit of, an individual to aid him in the pursuit of study or research. If services are required as a condition of receiving the fellowship, then the fellowship is compensation (wages). If no services are required as a condition of receiving the funds, then the fellowship is non-compensatory grant.

Foreign National Information (FNI) Form

Utilized by SMU's Foreign Nationals Office to obtain personal information from a foreign visitor to whom SMU will make a payment (typically honorarium and/or travel reimbursement). This information is used to determine if the intended payment is permissible.

Form W-8BEN

IRS form completed by a nonresident alien to claim tax treaty benefits for non-compensation income (e.g., scholarships/fellowships).

Form 1042-S

Calendar year-end IRS tax statement that reports U.S. income and tax withholding for a nonresident alien (similar to Forms W-2 and 1099, but for this specific type of income).

Nonresident Alien

Foreign national in the U.S. who, for tax purposes, is considered a "non-U.S. Person" and therefore subject to specific regulations under the Internal Revenue Code.

Qualified Expenses

Tuition and required fees, and/or books, supplies, and equipment required of all students in an academic course of study.

Residency Status for Tax Purposes

Per the Internal Revenue Code, a foreign national is deemed to be either a "nonresident alien for tax purposes" or a "resident alien for tax purposes." This distinction determines which tax regulations are applicable to the income or payment.

Scholarship

Amount paid or allowed to, or for the benefit of, a student (undergraduate or graduate) to aid such individual in pursuing his studies. No services are required in exchange for the scholarship.

Source of Income

Foreign-sourced income is subject to different reporting and taxation requirements than income sourced in the U.S. For services, the income source is determined by the physical location at which the services are performed. For scholarships/fellowships, the income source is determined by the payer's physical location (=U.S. for SMU).

Tax Treaty

Formal agreement between the United States of America and a foreign country, under which a resident of that foreign country is taxed at a reduced rate or is exempt from U.S. income taxes. Reduced tax rates and tax exemptions vary among countries and specific types of income.