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Services or Work Outside the USA

An international person or nonresident alien (NRA) is subject to US income tax only on US source income. The general rules for determining US source income that apply to most nonresident aliens are shown below.  Please note that only the types of income most relevant to Vanderbilt University, our employees, vendors and business visitors are shown.  Additional information on other types of income can be found directly from the IRS website.

 

TYPE OF INCOME FACTOR DETERMINING SOURCE OF INCOME
Salary Wages & Other Compensation Where services performed
Business Income:  Personal Services Where services performed
Business Income:  Sale of Inventory (Purchased) Where inventory sold
Business Income:  Sale of Inventory (Produced) Where produced (allocation may be needed)
Scholarships & Fellowships Residency of the taxpayer
Royalties:  Patents, Copyrights, etc. Where property is used

 

Departments should contact VISIT if payments will be made to international persons performing services or engaged in activities outside of the USA.   If the service performed by the individual will take place outside the U.S., there are no U.S. withholding and reporting requirements for the international individual.   However, the international individual must complete the Statement for Services or Activities Performed Outside of the USA.   

VISIT will have to examine each situation on a case-by-case basis to determine if the international person fits ‘contractor’ rules or ‘employee’ rules.   If the international person is an employee, the department is advised to contact the Office of the General Counsel to discuss whether Vanderbilt has corporate or employment obligations in the country of employment activity. 

  References/Related Topics

A detailed discussion of the general rules is provided in Chapter Two of Publication 519, U.S. Tax Guide for Aliens . 
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