Travel Reimbursement is NOT Subject to Withholding Taxes
If a travel payment is paid to the foreign national acting in:
Compensatory Capacity
Compensatory capacity relates to services such as an independent contractor or an honorarium recipient (whether paid or not). Travel payments paid to foreign national independent contractors and honorarium recipients are not subject to withholding taxes if paid according to normal travel payment procedures.
IMPORTANT:
The same procedure applies to the groups of visitors. Please contact International Tax Office in advance to schedule the group appointment.
Travel Reimbursement is Subject to Withholding Taxes
Non-compensatory capacity
Relates to a scholarship or fellowship that requires no service (other than for the recipient’s training). Travel payments paid to foreign nationals in lieu of or for scholarship or fellowship recipients (educational activities not attributable to a compensatory activity) are subject to the scholarship and fellowship payment rules. They are classified as a taxable travel grants and are reportable by Mason with the statutory tax rate of 30% unless a tax treaty or reduced rate applies. At the end of the calendar year, taxable travel grants for Nonresident Aliens are reportable to the Internal Revenue Service on an IRS Form 1042-S.
Payments Directly to Third Parties
Payments directly to third parties including hotels, agents or airlines on behalf of such a scholarship or fellowship recipient are also subject to withholding.
For Additional Information:
Visit the IRS site – Nonresident Aliens and the Accountable Plan Rules-.