Tax Withholding

All payments for services made to foreign individuals and, in some cases, entities are subject to tax withholding at the time of payment. The tax withholding rate is set by the IRS and the rate can vary based upon payment type and/or tax treaty qualification.

• Default rate is 30% that will have to be withheld and remitted to the IRS
• That withholding can be eliminated or reduced if:
  • The individual is considered a US resident alien for tax purposes; or
  • Is eligible for a tax treaty benefit; and
  • Required Glacier tax documentation is completed
• Reimbursement of travel expenses under the TAMU accountable plan is not considered tax reportable income and the withholding requirements do not apply.

The best practice is to immediately contact the Individual Payment and Reimbursement Office in FMO prior to inviting an individual, or for entities, prior to purchase. Contact this office at (979) 979-458-8490 or email internationalAP@tamu.edu. This will provide the department with immediate information on how to process and document the payment to the individual or entity. This will also provide direction on if the department must submit the International Visitor Request Form, who to contact for more information on visas, and if there is a need to complete a Glacier record.

Departments may opt to pay the individual’s tax liability as a part of the payment for usual academic activities. This process, known as grossing up is permissible. The GLACIER and immigration documentation requirements still exist. Use the Gross Up Tax Payment Spreadsheet to calculate.

It is the department’s responsibility to be aware of and follow all guidelines related to paying foreign individuals and entities. Failure to comply will result in payment processing delays. Additionally, the department may be liable for the individual’s original tax burden, as well as the gross up associated with it.