Payments to visitors from outside the United States are subject to a different set of taxation and withholding rules than payments to US citizens.
The determination of whether an international visitor qualifies as a "nonresident alien" in any given year is made by the Director, Tax Compliance, using data provided by the visitor or their host department to UC's International Services office. This data, including each visitor's current and past immigration statuses (for example, F-1 student or J-1 research scholar) and the exact dates of the visitor's physical presence in the United States (not just at UC), is critical in making an accurate tax analysis.
Payment requests for compensation or related travel expenses for international visitors must include written approval from UC International Services.
Payments to all nonresident aliens for tax purposes are subject to the following rules:
Payments of compensation to independent contractors, including guest speakers and other nonemployees providing short-term services to the university, are normally subject to 30% federal tax withholding.
Reimbursements of documented travel expenses for independent contractors, made in the same manner as for UC employees, are exempt from taxation and from withholding. UC departments can minimize the tax consequences incurred by their guest speakers and other international contractors by reimbursing travel expenses in lieu of equivalent honorariums.
Payments of scholarships/fellowships which do not represent compensation for services to the university, and which do not pay for qualified tuition expenses, are normally subject to 14% federal tax withholding. The 14% rate applies to visitors in F, J, M or Q immigration status. Visitors in other statuses receiving nonqualified scholarships/fellowships are subject to 30% federal tax withholding.
Please note that the tax-free travel reimbursement rules do not apply for persons receiving scholarships/fellowships. For those visitors who receive scholarships/fellowships, all reimbursements of travel, lodging and other business expenses are considered taxable portions of the scholarship/fellowship. 14% or 30% federal tax withholding normally applies to all such reimbursements.