Accounts Payable
Kansas State University
220 Anderson Hall
Manhattan, KS 66506
785-532-6202
785-532-1305 fax

Honoraria/Services Rendered

Payments of honoraria or payments for services performed in the United States for nonresident aliens are subject to additional tax guidelines.  Nonresident aliens who wish to claim tax treaty benefits and have a valid Individual Taxpayer Identification Number (ITIN) may complete Form 8233 for tax withholding exemption.  Only those individuals who are eligible for tax treaty benefits and possess a valid ITIN  need to complete this form.  Individuals who do not meet the requirements for filing Form 8233 may still be paid, however taxes will be withheld from the payment at the required rate of 35% (30% federal, 5% state).

Step 1:  Determine if the income if Foreign Source or U.S. Source Income

If the service is taking place within the United States, the payment is considered U.S. Source Income.  All U.S. source income is subject to U.S. tax guidelines.  To issue payments for honoraria or payments for services to nonresident aliens, please complete Step 2 and Step 3 below.

If the service is being performed in a country outside of the United States, it is considered Foreign Source Income.  To make payment for this service, verify with the vendor that they do not have a U.S. tax identification number (U.S. tax presence) and submit payment voucher noting the payment is for foreign source income and the vendor does not have a U.S. tax id.

Step 2: Establish if the individual has an ITIN and whether he/she is eligible for Tax Treaty Benefits

Individuals who do not have a current ITIN, but wish to claim tax treaty benefits, must first complete the W-7 Application.  The following documents must be completed and submitted during the W-7 Application process:

  1.  IRS Form W-7   The majority of applicants will select either box a (to claim tax treaty benefits) or box h (other).

  2.  IRS Form 8233 

  3.  Original or certified copy of current passport (must be current at time W-7 is submitted).  A certified copy is a copy that has been certified by a Certified Acceptance Agent (CAA) .  Original documents submitted by the IRS will be returned by mail within 60 days.  Documents will be mailed to the applicant at the address indicated on the W-7.  A pre-paid Express Mail or courier envelope can be included with the application for faster return delivery of documents.

  4.  A letter from the Social Security Administration (SSA), stating that individual is ineligible to receive a social security number.  If individual is present in the United States and is receiving honoraria payments, you do not have to get a letter of denial from the SSA. A letter from the authorized school official stating the purpose of the visit and that the individual will be receiving payment in the form of an honoraria will be enough.

 

Step 3: Select the method in which you need to pay the nonresident alien

 

Option A:  Nonresident alien HAS an ITIN and resides in a country that has a U.S. income tax treaty

  1.  The individual completes IRS Form 8233.

  2.  Once you receive IRS Form 8233 (may be scanned or faxed from the individual), verify the form is complete (applicable boxes completed, signed, dated).  Make a copy to return to the nonresident alien, make a copy for your department records, and immediately forward this form to the Assistant Director of Accounts Payable, 220 Anderson Hall.  This form must be received by Division of Financial Services and postmarked to the IRS within five days of the nonresident alien providing it for verification.

  3.  Complete the payment voucher, attaching a copy of the IRS Form 8233 to the voucher, and submit to Division of Financial Services.

 

Option B: Nonresident alien DOES NOT HAVE an ITIN and resides in a country that has a U.S. income tax treaty

  1.  Individual must first apply to receive an ITIN (see Step 1 above for additional information).  This process may take 6-8 weeks to complete, so begin as soon as possible to reduce the amount of wait time the individual has.

  2.  Once the individual has received their ITIN, he/she will need to provide IRS Form 8233 to your department.

  3.  Once you receive IRS Form 8233 (may be scanned or faxed from the individual), verify the form is complete (applicable boxes completed, signed, dated).  Make a copy to return to the nonresident alien, make a copy for your department records, and immediately forward this form to the Assistant Director of Accounts Payable, 220 Anderson Hall.  This form must be received by Division of Financial Services and postmarked to the IRS within five days of the nonresident alien providing it for verification.

  4.  Complete the payment voucher, attaching a copy of the IRS Form 8233 to the voucher, and submit to Division of Financial Services.

 

Option C: Nonresident alien DOES NOT HAVE an ITIN and resides in a country that has a U.S. income tax treaty, but DOES NOT wish to claim tax treaty benefits (the individual has the option of filing a U.S. Tax Return at the end of the calender year to request a refund)


  1.  The individual DOES NOT need to complete IRS Form 8233.  Choosing this option obligates KSU to withhold taxes at a rate of 35% (30% federal, 5% state)  from his/her payment.

  2.  Departments have two options for withholding of the 35% tax amount:

        A.  The department may reduce the payment the payment by 35%

             and pay the individual the remaining 65%.

 

                  Example:  If you submit a $500 professional services payment

                  request, you will pay the individual $325 (65% of $500) and

                  withhold $175 (35% of $500).

 

        B.  The department may choose to gross up the payment (seek

             department approval) to net the desired amount agreed upon for

             the professional services.

 

              Example:  If you wish for the individual to receive (net) $500,

              the gross (total) payment will be $769.23 ($500 / 65%).  The

              payment voucher for the individual will be for $500 and the

              amount withheld will be $269.23.

 

  3.  Once the method of calculating the payment has been determined, submit a voucher payable to the individual for the amount, after taxes are withheld.  In the description field reference the document number the payment to the vendor was made on and your calculation used in determining the tax withholding.

  4.  Submit a second voucher payable to Kansas State University, 220 Anderson Hall to submit to the state and IRS on the nonresident alien's behalf.  In the description field reference the document number the payment to the vendor was made on and your calculation used in determining the tax withholding.

 

Option D:  Nonresident alien DOES NOT HAVE and ITIN and DOES NOT reside in a country that has a U.S. income tax treaty

1.  The individual DOES NOT need to complete IRS Form 8233.  Choosing this option obligates KSU to withhold taxes at a rate of 35% (30% federal, 5% state)  from his/her payment.

  2.  Departments have two options for withholding of the 35% tax amount:

        A.  The department may reduce the payment the payment by 35%

             and pay the individual the remaining 65%.

 

                  Example:  If you submit a $500 professional services payment

                  request, you will pay the individual $325 (65% of $500) and

                  withhold $175 (35% of $500).

 

        B.  The department may choose to gross up the payment (seek

             department approval) to net the desired amount agreed upon for

             the professional services.

 

              Example:  If you wish for the individual to receive (net) $500,

              the gross (total) payment will be $769.23 ($500 / 65%).  The

              payment voucher for the individual will be for $500 and the

              amount withheld will be $269.23.

 

  3.  Once the method of calculating the payment has been determined, submit a voucher payable to the individual for the amount, after taxes are withheld.  In the description field reference the document number the payment to the vendor was made on and your calculation used in determining the tax withholding.

  4.  Submit a second voucher payable to Kansas State University, 220 Anderson Hall to submit to the state and IRS on the nonresident alien's behalf.  In the description field reference the document number the payment to the vendor was made on and your calculation used in determining the tax withholding.