Foreign-source income

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

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

  • Generally, the location of the activity would be where a service is being performed, property is being rented, or the location where fellowship income is expected to be utilized in support of one’s scholarship or research.
  • Royalties, copyrights, and patents, such as those paid for the use of intellectual properties (i.e., industrial properties and software licenses), are considered U.S.-sourced if...
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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...

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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...

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Making Payments

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 procedure for...

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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.

Harvard is required to indicate the “location of activity” when paying income to foreign individuals and foreign entities to comply with IRS tax withholding and reporting regulations. Most often, this question...

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Honorarium, Royalty, Prize, or Other Payment

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

  • Honoraria, or payments made at the discretion of the University as compensation for professional services, including guest lectures. If honoraria and other performance-related payments from the University exceed $5000 per year, in the aggregate, the marginal earnings would also be subject to Massachusetts State tax of around 5.5%.
  • Independent contractor/consultant payments issued when Harvard is charged for the service....
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Tax Withholding on Payments

Payments from Harvard University may be subject to taxation in accordance with regulations strictly enforced by the U.S. tax authorities (IRS/MassDOR). Harvard collects, or withholds, two types of tax: Federal/State and Social Security/Medicare (FICA), liability for which is based on several factors:

  • Your U.S....
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