Whether an individual is an actual independent contractor, and not an employee, has important implications for the policies, procedures and payment processing requirements that should be taken into consideration.
Whether receiving or making payments, Harvard guidelines and U.S. tax/immigration regulations will influence the end result, including how the payment will be taxed. There are various compliance issues of which to be mindful, and numerous laws by which to abide, that will collectively determine the direction one should take. Work authorization, income category, visa type, tax residency status, and tax treaty eligibility are some of the many factors that influence how a payment to a foreign national should be processed.
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
Social Security and Medicare taxes, or "FICA" tax (approx. 7.5% of gross income), are collected by Harvard University but administered independently by the U.S. Social Security Administration. Non-student U.S. citizens, lawful permanent residents, and resident aliens (as designated by the GLACIER tax compliance system) are subject to FICA taxes on salary and wages earned as an employee.
It may be possible to refund FICA taxes incorrectly withheld by the University:
To determine if FICA taxes were incorrectly withheld in the current calendar year, you need to...
Nonresident aliens, for tax purposes, unlike U.S. citizens and residents, are only subject to tax on income that is considered U.S.-source income.
Foreign-source Income received by nonresident aliens is not subject to U.S. taxation.
Income is generally considered foreign-source if the location of the activity for which the payment is being issued is outside the U.S. A clear indication of the location of the activity is necessary on all supporting documentation for the payment to be correctly classified. This applies to both...
Employment compensation, or a salary, is taxed at marginal graduated rates, meaning income earned over certain levels set by the U.S. tax authorities is taxed at progressively higher rates. Please see the section on income tax withholding tables in IRS publication 15 to get an idea of how your salary will be taxed by Harvard.
If eligible for tax treaty benefits, both nonresident aliens and resident aliens can claim exemption...
Per IRS regulations, tax treaties must be renewed annually. To meet these requirements and claim an exemption for 2018 (if previously determined eligible in 2017), you MUST complete the three steps below before noon on Friday, December 22nd, 2017. The renewal process generally takes less than 15 minutes.
STEP 1: Update and/or verify certain information in GLACIER, Harvard’s online tax compliance system
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: