Honoraria Payment

The law states "(q) Any alien admitted under section 101(a)(15)(B) may accept an honorarium payment and associated incidental expenses for a usual academic activity or activities (lasting not longer than 9 days at any single institution) as defined by the Attorney General in consultation with the Secretary of Education if such payment is offered by an institution or organization described in subsection (p)(1) and is made for services conducted for the benefit of that institution or entity and if the alien has not accepted such payment or expenses from more than 5 institutions or organizations in the previous 6-month period."

The first step in making arrangements to pay an honorarium is to verify the visa type the international visitor will travel under when coming to the U.S. If the international visitor is not on a B-1 or a VWB visa, please contact Devon Slough before taking any further steps.

Two documents are available that provide further information about paying honorarium/self-employment income (and concomitant travel reimbursements):

• For details on paying honorariums to the most common visa types, including the documentation that must be requested from the payee, please see the Chart of Honorarium Payments, Independent Personal Services Compensation and Travel Reimbursements.
• For details on paying honorariums/self-employment income to all visa types, please see Payment Guidelines for Various Visa Types.

Immigration has developed three tests to apply to an activity taking place in the US to distinguish the activity as employment (or not). If anyone of the three applies, the activity is deemed to be employment and, therefore, not a permissible activity for a B-1 visitor, unless immigration laws allow a specific exception:

• The "US Income" test -- is the income from a US source? Income is deemed to be from a US source if the costs are paid by a foreign business but then charged to a US business.
• The "But For" test -- would the work be carried on by a US citizen or work authorized alien but for the B-1 visitor?
• The "Who Benefits" test -- who is benefiting from the activities of the alien? Is it a foreign company or a US company? A US company is benefiting if the activities satisfy the contractual obligations of a US company.

Based on the Hong Kong tailor legal case, pre-production and post-production are acceptable B-1 classifications. Express warranty work is also acceptable.

Honorarium Exception to the B-1 Tests: Visitors entering the US in B status are authorized to accept honorarium payments and incidental expenses for "usual academic activity or activities" paid by:

• An institution of higher education or related or affiliated nonprofit entity
• A nonprofit research organization, provided that the 9/5/6 conditions are met
• 9/5/6 Rule for Honorarium Payments:
  • No more than 9 days stay at one institution
  • No more than 5 institutions making honorarium payments
  • Received in the prior 6 months

The term "honorarium" may have a lay meaning, but it also has a specific meaning under US immigration law. Honoraria are self-employment income for services conducted for the benefit of the payer institution. Its applicability is restricted to B (and VW) classification visitors who receive compensation for lecture-type services, within specified maximum periods of time and number of academic or non-profit institutions.

An honorarium paid to a nonresident alien who is coming to the U.S. for a business purpose, such as to give a lecture, is subject to 30% withholding and Form 1042-S reporting unless a treaty exception applies.

Payment for Services

If the primary benefit for attending a conference inures to the individual who is merely a participant at the conference, there are no services being performed. If the primary benefit of the individual's presence at the conference is to the other participants at the conference and/or to the organization sponsoring the conference through the individual sharing information through the presentation of a paper or lecture, or through collaboration or participation on panels, then services are being performed by the individual.

Form W-8BEN is required as a certificate of foreign status for an honorarium. This form also is used to show that a TIN was requested (as is required.)

Form 8233 (and a TIN) is required for a treaty exemption for an honorarium.

If a visiting NRA is not being paid an honorarium, only being reimbursed travel expenses, the FNIF is not required. The Travel Compliance Statement is required.

Only B (and VW) visitors are covered by honorarium rules.

B-1 Visa:

• Does not exceed the 9 / 5 / 6 Rule limitations:
  • May be paid an honorarium
  • May be reimbursed for travel expenses (No withholding or reporting)
• Exceeds the 9 / 5 / 6 rule limitations
  • May not be paid an honorarium
  • Without a business purpose (i.e. no service) -- study/training/research:
    • Immigration rules allow for reimbursement of travel expenses as long as stay is less than 1 year and for academic activities.
    • Tax rules state that expenses are in the nature of a travel grant and are taxable at 30% (F, J, M or Q recipients are taxed at 14%)
    • May be excluded from taxation with a tax treaty (report on 1042-S)
    • Accountable plan rules do not apply -- 30% withholding
  • Payments and reimbursements that fail to meet the away-from-home, temporary, or accountable plan rules are taxable.
    • Employee recipients:
      • Subject to payroll taxes
      • Report in Form W-2 gross wages
      • May be exempt under a treaty, if wages of a teacher or researcher are exempt (Form 1042-S)
    • Self-Employed recipients:
      • Resident alien:
        • Backup withholding if no SSN or ITIN
        • Form 1099
      • Nonresident alien:
        • 30% withholding
        • Form 1042-S
  • With a business purpose -- employment or self-employment:
    • Primary benefit for the business purpose must be to the payer
    • Immigration rules allow for reimbursement of travel expenses
    • Tax rules allowing exclusion on travel reimbursements under an accountable plan require a business purpose (i.e. services)
    • Travel reimbursement rules:
      • expenses must be substantiated
      • less than 1 year of time in US
      • for academic activities
      • travel is away from home
      • temporary visit to US
      • if travel is extended to beyond a year, expenses are income from date of extension
    • Individuals tax home is their principle place of business
    • Must have a substantial period of time between visits to restart the clock (seven months at least)
    • M & I only allowed for independent contractors
    • Excludable expenses do not apply to spouses and dependent

B-2 Visa:

• Does not exceed the 9 / 5 / 6 Rule limitations:
  • May be paid an honorarium
  • May be reimbursed for travel expenses only if individual was conducting business on behalf of the University of Richmond and the individual complied with the accountable plan rule. (No withholding or reporting.)
• Exceeds the 9 / 5 / 6 rule limitations:
  • May not be paid an honorarium
  • May not be reimbursed for travel expenses (Withhold 30% and report on a 1042 and 1042-S)

There are no provisions for honoraria, per se, to be paid to any class of alien other than B. An honorarium paid otherwise is compensation for services, either self-employment or services for an employer.

• A-1: Used only to perform services for NRAs government, so it would technically be illegal to pay an honorarium to an NRA in A-1 status. Under no circumstances would a treaty exemption be allowed.
• F-1: Very unusual to receive an honorarium as students are never authorized for self-employment except with an OPT or hardship-based EAD. If the "honorarium" is paid for services on campus, it may qualify for on campus employment as long as the student being paid is a student at the university sponsoring the event.
• G-1 & G-4: Technically speaking, neither a principal G-1 nor a principal G-4 is eligible to accept compensation from anyone but their own government for their government-related work unless they possess a completed Form I-566, which is procured from the State Department.H1-B: Payment of an honorarium to an H-1B from another institution must be made to the institution, who then pays the visitor.
• J-1: The honorarium rules do not apply to J classification aliens. A J-1 would be permitted to provide a lecture and be compensated with an honorarium only if the J-1 program under which the NRA entered the US specifically permitted it and it was cleared with that program sponsor. The honorarium is subject to 30% withholding and the reimbursed expenses can be offset with a withholding allowance.
• Mexicans: Citizens and permanent residents of Mexico generally must have a nonimmigrant visa or Border Crossing Card (BCC). The BCC may be used to enter the US from within the Western Hemisphere. The laser visa satisfies a legislative requirement that every BCC issued after April 1, 1998, contain a biometric identifier and be machine-readable. Electronic BCCs allow Mexican citizens to travel within 25 miles of the US border for 30 days. To travel farther or longer, a cardholder must obtain an I-94 form, which extends the allowance to 10 years. The BCC does not allow the individual to work. However, within the permitted use of the BCC, the Mexican visitor is entitled to the benefit of the honorarium rules.
• O-1: Pay the approved employer for an occasional honorarium. If not, the alien would breach visa status to engage in self-employment and lose it if discovered.
• TN: Whether an honorarium can be paid depends upon the relationship, if any, between University of Richmond and the TN aliens "sponsoring" employer or contract. If there is none, the TN alien would be in violation of his status to accept any payment, including coverage of expenses.

Special Note: Canadians & the B-1 / B-2 VisaCanadians who are traveling directly from Canada may follow the documentation rules below.  Canadians who are traveling from another country besides Canada, must enter with a B visa in the passport and must obtain an I-94 card from CBP. Canadian citizens with no admission documents and proof of citizenship, are imputed to have visitor status.  Self-employment income (honorarium type work) is allowable and may be paid and/or reimbursed travel expenses WITHOUT a B visa or an I-94 card. The individual may not be in the US on someone else's H-1B, TN or J-1 (or other) visa. The individual must show proof of citizenship (just as was required to enter the United States). The individual must stick to the 9/5/6 rules that govern the B visa. The individual is treated as if he traveled on a B visa (either a B-1 or a B-2).  An I-94 card is best for payment although CBP personnel have no idea of this necessity and can be expected to be reluctant to issue the I-94 card

If the Canadian individual exceeds the 9/5/6 rule (ex:  works for longer than 9 days):

• the individual is treated as though he is on a B-1 visa
• honorarium is not allowable
• travel reimbursement is allowable
  • with a business purpose -- not taxed
  • without a business purpose -- taxed at 30%

Tax Treaty

Teacher/Researcher Article: An individual who is providing lecture services as an independent contractor can claim the teacher/researcher article benefit since the articles apply to compensation (or remuneration) for services without specifying that the income be from employment or self-employment. Whether the individual should use the teacher/researcher article benefit for independent personal services is another matter. Certainly, if the treaty has a one-time use rule, this would not be a good idea unless the person is also a professor at another institution using the benefit for a longer period than a few days. (In TaxNav, enter it as employment income for the analysis to work.

Payments to those considered "High Dignitaries": The honorarium rule included by Congress in the 1998 ACWIA did not make exceptions for anyone, including high dignitaries. One may enter in diplomatic status, but in such cases would be expected to appear on behalf of his government. Honorarium payments would, presumably, in such case be made to that governments diplomatic mission in the US or to at least a government entity. If the individual appears on his own, he should be a visitor, since that is the only exception that exists to the self-employment rules. Whether, should he enter as a diplomat rather than a visitor, US immigration law would be enforced against him or the institution paying the visitor is another matter.

An individual that requests that their honorarium be a contribution made on the individual's behalf to a non-profit (whether US or foreign) in lieu of direct payment to the individual for the services performed will find that the income is still considered to be the individuals and not that of the non-profit. Individuals who assign their income to other entities under our tax rules are still obligated for the taxes. Taxpayers are not allowed to assign away their income tax obligations by having their income paid to others.

Form 1040-NR is used by those who have received honorarium payments (i.e. self-employment income); not Form 1040NR-EZ. The self-employment income and related expenses are recorded on Schedule C or Schedule C-EZ and recorded on the business income line 13.