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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 on the IRS website.


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 ITO 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.   

The International Tax Office will examine each situation individually to determine if the international person falls under the  category of contractor or employee. 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 .