Proper Tax Treatment for Human Subject Incentives Valued at $100 or More Paid to Non-Resident Alien

When payments or incentives are made to a non-resident alien, tax withholding rules apply. For payments and incentives values > $100, the human subject or the Department must pay the 30% Federal withholding tax at the time the money is disbursed.

 

Example 1 – If you want the human subject to absorb the tax payment:


If the payment is $100...

Example 2 – If you want your Department to pay the tax:


If you want the human subject to receive a total of $100...

This is the "gross up" formula:  desired payment amount + 42.9% of the desired payment amount.

 

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