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I was wondering whether someone from France, travelling to the US on a visa waiver program (ESTA) to attend short-term training, should pay US federal taxes on the reimbursement of expenses incidental to their stay.
To be clearer, I am talking about this business category in the ESTA program:
attend short-term training (you may not be paid by any source in the United States with the exception of expenses incidental to your stay)
Following our clarifying exchange of comments (I've deleted mine to streamline the content), here is the relevant information from the university. In this instance, the source is Vanderbilt, the location of the conference, but it would not differ at other institutions, as all must adhere to the same regulations.
Payments to Conference Participants
Conference Attendees :A conference attendee is a person who attends a conference but is not an invited speaker or panelist.
Travel reimbursements for conference attendees are considered to be taxable income by the US Department of Treasury, Internal Revenue Service (“IRS”). The reimbursement is a “travel grant” or “travel award” and is a non-service payment.
Travel expense reimbursements provided to international conference attendees are subject to US income tax. If income tax withholding is required, Vanderbilt University must withhold the tax from the reimbursement and forward the payment to the IRS. This means that the international conference attendee will not receive a full reimbursement of their travel expenses and travel should be planned with a firm understanding of this.
The amount of income tax withheld depends on a number of factors including the visa status of the attendee; tax treaties benefits; and the length of physical presence in the USA; it normally ranges from 14% - 30% of the travel reimbursement. If you would like to receive an income tax assessment prior to arranging travel, please complete [the] Business Visitor Questionnaire (BVQ) as quickly as possible.
Travel reimbursements to domestic (“US residents and US residents for tax purposes”) conference attendees are also income. However, domestic conference attendees are required to self-report the receipt of the travel reimbursement on their annual tax return. [The university] is not required to withhold income tax at the time the travel reimbursement is provided.
Reimbursement Of Travel Expenses
All international visitors can receive travel reimbursements. However, whether those payments are business expenses or taxable income depends on the visa category of the visitor and the services performed. There may also be restrictions on what activities an international visitor may engage in while in the USA. If a travel expense is not taxable, Windstar completion is not required.Non-Taxable Travel Expenses
- Invited speaker or consultant hired by [the] university
If an international person has been invited to speak, present a paper, or otherwise actively conduct an educational or academic activity (in whole or in part), travel reimbursement expenses are not considered to be taxable income. Instead, they are categorized as business expenses since the international visitor was invited on campus by [the] university.
Attach a copy of the letter of invitation (or copy of brochure showing individual on the program itinerary/agenda) to the check request (CR) or consultant form along with all documents required by Disbursements.
- Moving expenses for employees who meet IRS "time and distance" and "qualified travel expense" definitions
Attach receipts and document that payment is for relocation expense.
- Job-related interview expenses (this does not include students visiting campus for enrollment purposes or recruitment of graduate students)
Attach documents that demonstrate the purpose of the expense.
Taxable Travel Expenses
- Non-employee or contractor
- Conference or seminar attendees who are not speakers or presenters
- Students traveling to seminars outside of [the] university
- Short-term trainees
- Prospective students
- Employee non-business related travel
- Living expenses for short-term employees
- Moving expenses that do not meet IRS requirements
Expense reimbursements are taxable if there is no quantifiable service provided to [the university] by the individual. Another way of stating this is that, if there is no compensatory relationship or business relationship the reimbursement is taxable. In these situations, the payee is neither an employee nor independent contractor. Whether or not any other wage or honorarium is provided is not relevant to the tax withholding assessment.
Addendum: For convenience, here is the US Internal Revenue Service (IRS) information on Taxation of Nonresident Aliens, including links to related publications and forms. Often, non-immigrant foreigners don't file a return after their departure. They may be unaware that they're due a refund, even when the amount of taxes withheld is not significant. The result is a huge overpayment of US taxes by foreign nationals. Filing a tax return doesn't require a tax preparer, although some may opt to pay for such a service. It can be done online, e.g., and any monies due can be transmitted electronically directly to a person's bank account.
