Foreign-source income

Payment for services performed, or research to be conducted, outside the U.S.

I am a nonresident performing services outside the United States, will I be taxed at 30%?

The Sprintax Tax Summary Report indicates the tax withholding amount that will be applied to payments for services performed in the United States. If you are a foreign individual or entity performing services exclusively outside of the United States, there will be no tax applied to payments for those services. Please note that payments for royalties are treated as U.S. sourced if the intellectual property is used inside the United States. U.S. sourced royalty payments are taxed at 30% unless a tax treaty applies and is granted.

What is the “Location of Activity” when processing a payment in Accounts Payable, and why is it important to include?

Harvard is required to indicate the “location of activity”, particularly when paying income to foreign individuals and foreign entities, to comply with IRS tax withholding and reporting regulations. A clear indication of the location of the activity (such as the country) is necessary on all supporting documentation for the payment to be correctly classified for tax purposes. This applies to both service and non-service income.
Generally, the location of...

Where can I find information on how to process payments to a foreign individual?

Please see Making Payments.

Frequently Asked Questions

Should I receive any tax reporting documents?

If you had no U.S.-source funding, you will not receive any tax reporting documents. It is possible to receive more than one type of tax reporting document, if you received more than one type of funding from a U.S. source (wages plus a fellowship, for example). The type of document you might receive depends on the type of funding you received. If the only funding you received from Harvard was a scholarship that was applied directly to your term bill (1098-T), you will not receive any tax reporting documents. If you had no U.S. source funding, you will not receive any tax reporting...

Do I have to file a tax return?

If you were a nonresident alien and were present in the United States during any part of the tax (calendar) year in question on an F,J, M, or Q visa, there is at least one tax form you must complete (IRS Form 8843).

If you were a nonresident alien who did not receive funding from a U.S. source (please be aware that funding from a foreign source that is paid through Harvard is usually considered U.S.-source), you do not have to complete an actual tax return (eg.1040 NR), but, as mentioned above, may...

Making Payments to Foreign Individuals

Use these guidelines to better understand payments to foreign individuals.

Harvard is required to follow:

Internal Revenue Service (IRS) regulations that govern the taxation of payments to nonresident aliens, which differ from those that govern payments to U.S. citizens and resident aliens; and
Regulations set by U.S. Citizenship and Immigration Services (USCIS) when making payments to certain foreign scholars and students

These regulations, which can be complicated, determine the tax status and proper...

Employees Working Abroad

Use these guidelines to better understand tax obligations of Harvard employees working outside the United States. For general information on tax obligations of all Harvard payment recipients outside the U.S., please see U.S. or Foreign-Source Income.

Topics covered below:

U.S. Citizens and Resident Aliens Working Outside the United States
Nonresident Aliens Working Outside the United States
...

Determining Tax Residency Status

Use these guidelines to determine the tax residency of a foreign individual present in the US:

A nonresident alien for tax purposes (as defined by the IRS):

Does not have a green card (Permanent Residence card), and
Does not satisfy the substantial presence test
- The substantial presence test is a calculation used by the Internal...

U.S. or Foreign-Source Income

Nonresident aliens for tax purposes and foreign entities, unlike U.S. persons and U.S entities, are only subject to tax withholding on income that is considered U.S.-sourced and not foreign-sourced. In order for Harvard to consider income as foreign sourced, the foreign payee must have attested to their foreign status by submitting a completed W-8. Instructions for form W-8BEN for foreign individuals is accessible directly from the IRS website.

Harvard is required to indicate the “location of...

Honorarium, Royalty, Prize, or Other Payment

The following are generally subject to a 30% tax withholding rate paid to nonresident aliens, in the absence of tax treaty benefits:

An Honoraria is defined as a gratuitous payment of money, or any other thing of value, to a person for the person’s participation in a usual academic activity for which no fee is legally required. They are payments made at the discretion of the University as compensation for professional services, including guest lectures. If an honoraria is a performance-related payment from the University, and exceeds $5000 per year in the aggregate, the...

Tax Withholding and Payments to Foreign Individuals

Payments from Harvard University may be subject to tax withholding and/ or reporting in accordance with regulations strictly enforced by the U.S. tax and immigration authorities. As a withholding agent, Harvard University is required to collect the appropriate IRS certification form (W-8BEN or 8233) from nonresident aliens to establish their foreign status. Sprintax Calculus will generate the necessary IRS forms when paying a foreign supplier that has U.S. presence. In addition to the payment and reporting details, IRS certification form W-8BEN informs what statutory tax withholding or...

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