International Tax Compliance

Taxation of foreign individuals and entities is restricted according to the source and type of income. Foreign sourced income is not taxable or reportable for U.S. tax purposes. U.S. sourced income is taxable and reportable for U.S. tax purposes and may be paid at a reduced rate below the mandatory 30% under a tax treaty.

Royalties and cash prizes are always considered U.S. sourced income, as the use or activity is located inside the U.S.

See below for details classified by the type of entity and the location of the activity. Additional details are included in HBP Part 12.5. International Nonemployees.

Payments to Foreign Employees

See the Payroll Services website for information on employee payments made to foreign individuals, including when they are providing services outside the U.S.

Payments to Foreign Individual Contractors

Providing Services outside the U.S.

All contractor payments made to foreign individuals working outside the U.S. must be approved by Tax Services. Email with these requests. A copy of the approval email from Tax Services should be included with the voucher support when submitted to the Image Retrieval System.

When preparing the EICCC, the question pertaining to this ‘visit to UT’ should be answered “Yes”, as it will be less than 9 days (zero days). For the type of visa, enter “Work in Country”. Use object code 1326 for the payment to bypass immigration review and avoid the automated 30% U.S. federal income tax deduction from the payment.

Object code 1326 requires adding two document notes to the VP2 in *Define:

  1. The citizenship country (or country of permanent residence) of the payee
  2. The country where services were performed and completed

POINT Plus audits require all individuals to have a U.S. tax number in order to generate a PO authorization. If the individual does not have a U.S. Tax Number (ITIN or SSN), authorize the payment by executing a Business Contract. The Speaker Agreement or the Individual Services Agreement is the recommended method of authorization, depending on the type of services the individual is providing. Please use the wording for a foreign payee; the vendor must sign the contract after the Business Contracts office signs it. See the Business Contracts webpage for more information regarding this process.

Providing Services inside the U.S.

Individual is currently living outside the U.S.

These individuals must enter with B-1 or WB visa to allow payment and comply with the "9/5/6" qualifications, which restricts the visit at The University of Texas at Austin to 9 days or less. See the B Visitor Checklist for further details on the documents required for a B type visitor.

If the individual will be at the University longer than 9 days, the department must contact Texas Global to discuss the visa options available for the visitor based on the length and type of work to be performed.  

Individual is currently living inside the U.S.

These individuals must comply with their program restrictions, including work authorizations by their sponsoring organization. The majority of times, a J-1 visa is issued for these situations. See the J Visitor Checklist for further details on the documents required for a J type visitor. See HBP 12.5.10. Visa Table for a holistic list of visas that allow for work in the U.S. 

Departments will need to to consult with Tax Services, which will authorize the department to proceed with a contract (individual does not have permanent SSN or ITIN) or purchase order (individual has permanent SSN or ITIN) for services and the EICCC, if a legal payment is possible. 


Foreign individuals may apply for tax treaty benefits on their payments if:

  • the payment is over $5,000
  • they have a permanent SSN or ITIN
  • their citizenship & permanent residence country has a tax treaty with the U.S.

If these conditions are met, the department will need to email requesting the individual be set up with a Glacier record. This will generate the appropriate IRS tax treaty forms, which they must sign before a treaty may be applied. Departments should allocate an appropriate amount of time between the initiation of the treaty process and the payment issue date.

If these conditions are not met, the individual is not eligible for tax treaty benefits at the time of payment and the hosting department must inform the individual that the payment will have 30% tax withheld. Alternatively, a department may opt to gross-up the payment to cover the tax.

All nonresidents for U.S. tax purposes that are working within the U.S. will receive a 1042-S form from UT and may apply for a tax refund when filing their annual U.S. tax return using IRS Form 1040NR.

Payments to Foreign Entities

Providing Services outside the U.S.

Coming soon!

Providing Services inside the U.S.

Coming soon!

Royalties Paid to Foreign Individuals & Entities

Providing Services outside the U.S.

Coming soon!

Providing Services inside the U.S.

Coming soon!