Middlebury

 

Payments to Visitors

Whether the visitor is a professor or researcher coming to the College or Institute to give a talk/lecture/presentation or whether the visitor is an artist performing on campus or whether the visitor is a consultant working on a project, anybody providing a service such as above is considered an independent contractor.

Payments made to an independent contractor are generally taxable. Below is detailed information how different types of payments are treated tax-wise for U.S. citizens, Legal Permanent Residents, Resident Aliens, and Non-Resident Aliens.

For information on what forms are needed in order to hire an independent contractor see the independent contractor website. For information on how to pay the independent contractor check this voucher checklist.

For international visitors please keep in mind that the visitor is coming on an appropriate visa status. Here is more information on types of visa.

Speaker / Performer / Independent Contractor Fee

If they are a:

U.S. Citizen, Legal Permanent Resident, Resident Alien for Tax Purposes

... is processed through the individual departments in Middlebury / the Institute and paid via check or wire;

... is NOT taxed by the College / Institute unless no social security number or individual taxpayer identification number is provided. Then 28% backup withholding is required by the IRS;

... is reported by the College / Institute on Form 1099MISC in Box 3 if total payments exceed $600;

... is reported by the visitor on Form 1040 or 1040EZ.

Non-Resident Alien for Tax Purposes

... is taxed by the College / Institute and the tax is subtracted from the Independent Contractors' check on behalf of the IRS. The federal tax rate is generally 30%, Vermont tax rate is 8.1%, California tax rate is 7% for payments over $1,500. Depending on the tax residence of the Contractor, a treaty benefit might apply dropping the federal and Vermont tax rate to 0%. A treaty benefit can only be applied if a social security number or individual taxpayer identification number is provided;

... is reported by the College / Institute on Form 1042-S with income code 20 for performers/artists, income code 16 for everybody else;

... is reported by the visitor on Form 1040NR or 1040NR-EZ.

Reimbursements & Direct Payment of Travel Expenses

... include, but are not limited to visa fees, mileage, car rental, gas for car rental, toll, parking, air fare, train fare, bus fare, taxi fare, hotel, housing, utilities for housing, hospitality, meals, site visits, special events, conference registration, office supplies, postage, photocopies, printing, binding, per diem payments for meals and incidentals per GSA rate;

... are processed through the individual departments in Middlebury / the Institute and paid via check or wire for reimbursements or directly to the hotel/airline etc.;

... are NOT taxed by the College / Institute as they fall under the accountable plan rules (Treasury Regulation 1.62-2). To honor the accountable plan rules the payee has to (1) establish the business purpose and connection of the expenses; (2) substantiate the expenses via original receipts claimed to the payer within a reasonable period of time; and (3) return any amounts to the payer which are over and above the substantiated business expenses within a reasonable period of time;

... are NOT reported by the College / Institute on any IRS form unless payments are made based on copies of original receipts or amounts are over and above the substantiated business expenses, or not accounted for within a reasonable period of time and are then reportable to the IRS on Form 1099MISC for U.S. citizens, Legal Permanent Residents, Resident Aliens or Form 1042-S for Non-Resident Aliens;

... are NOT reported by you on Form 1040 or 1040EZ (Form 1040NR or 1040NR-EZ for Non-Resident Aliens) unless above exception and may then be claimed as expenses on your personal or business income tax return.

Gifts in Lieu of Payments

If they are for a:

U.S. Citizen, Legal Permanent Resident, Resident Alien for Tax Purposes

... include, but are not limited to gifts of property such as a College / Institute t-shirt, coffee mug, ball cap, pen set, fruit, books, certificates to the College Bookstore or College Dining, occasional tickets to athletic or entertainment events, etc.;

... are generally discouraged by the College / Institute. They are allowable if minimal in value and provided infrequently. Gifts for life events such as marriage, baby, death, etc. are personal expenses and are not paid by the College / Institute.

... are processed through the individual departments in Middlebury / the Institute;

... are NOT taxed by the College / Institute unless greater than de minimis ($100) and no social security number or individual taxpayer identification number is provided. Then 28% backup withholding is required by the IRS;

... are NOT reported by the College / Institute unless greater than de minimis ($100). Then payment is reported on Form 1099MISC in Box 3 if total payments exceed $600;

... are reported by Visitor only if greater than de minimis on Form 1040 or 1040EZ.

Non-Resident Alien for Tax Purposes

... are NOT taxed by the College / Institute unless greater than de minimis ($100). Then taxes need to be assessed. The federal tax rate is generally 30%, Vermont tax rate is 8.1%, California tax rate is 7% for payments over $1,500. Depending on the tax residence of the Contractor, a treaty benefit might apply dropping the federal and Vermont tax rate to 0%. A treaty benefit can only be applied if a social security number or individual taxpayer identification number is provided;

... are NOT reported by the College / Institute unless greater than de minimis ($100). Then payment is reported on Form 1042-S with income code 50 (miscellaneous income);

... is reported by Visitor only if greater than de minimis on Form 1040NR or 1040NR-EZ.