Tax Withholding for Payments to Foreign Nationals or Nonresident Aliens (NRA)

Directive Statement

This directive establishes the proper methods of withholding tax for payments to foreign nationals or non-resident aliens (NRA), as these payments are subject to withholding tax requirements on their U.S. source income.  All payments made to foreign nationals or NRAs must be approved by Payroll Services, based on the directive Requirements for Payments to Foreign Nationals, Nonresident Aliens (NRAs).

Reason for Directive

The purpose of this directive is to comply with IRS regulations 1441, 1442, and 1443 that require federal NRA withholding taxes made to foreign persons.

Generally, the NRA withholding requirement is 30% unless the Internal Revenue Code stipulates a reduced rate or exemption based on U.S. tax treaty benefits. In addition, these regulations provide for the following:

• 14% Federal withholding tax on the portion of scholarships paid for living expenses
• 30% Federal withholding tax on honoraria payments made to foreign visitors and scholars
• 30% Federal withholding taxes paid to NRA independent contractors

The University of Florida extends tax treaty benefits to qualifying foreign nationals using the online Foreign National Information System (FNIS).  The treaty renewal process for the upcoming calendar year is initiated later during the fall semester.

Who must comply?

All departments processing a payment to a foreign national, resident alien or nonresident alien.

Procedures & Best Practices