Foreign National Tax Compliance
Get guidance on how the university pays foreign nationals in accordance with IRS and U.S. Citizenship and Immigration Services regulations.
Payments to Foreign Nationals
The Internal Revenue Service (IRS) along with the U.S. Citizenship and Immigration Services (USCIS) impose regulations in regards to certain types of payments for foreign nationals. Failure to follow these regulations may result in penalties and interest imposed by the IRS. NC State University (NC State) is required to comply with U.S. federal tax law when making payments to or on behalf of non-citizens of the United States. In addition to tax regulations, certain payments are only allowable based on an individual’s immigration status pursuant to immigration law. Since NC State is required to comply with U.S. tax and immigration laws when making payments to its foreign visitors, and since these rules can be complex, both the University Controller’s office and the International Compensation and Taxation office work together to assist departments in the process of paying foreign nationals while maintaining compliance.
International Compensation and Taxation employs foreign national tax specialists devoted specifically to these matters. These specialists can assist university departments and foreign visitors on understanding their U.S. tax obligations. Many international students, research scholars and visitors who come to NC State are “nonresident aliens” for tax purposes. Individuals who are deemed to be “nonresident aliens” for US federal income tax purposes are subject to tax under the Internal Revenue Code. In general, all income (wages, scholarships, fellowships, prizes, awards, etc.) paid by the university to a foreign person, or to a third party on behalf of the foreign person, is taxable UNLESS the income is:
(1) exempt from tax under the provisions of an income tax treaty between the U.S. and the person’s country of residence;
(2) exempt from tax under an Internal Revenue Code section; or
(3) is foreign sourced income.
These tax laws are complex and can be confusing to the foreign national and/or department staff person responsible for complying with the regulations. The University Controller’s office in conjunction with the International Compensation and Taxation office are available to help you understand some of these confusing tax issues whether you are an international student, scholar, a visitor receiving a payment, or the department attempting to make a payment to a non-citizen.
North Carolina State University is considered the withholding agent and reports all taxes withheld to the IRS for year-end reporting.