The department hosting an international visitor may offer to pay the travel expenses of an international visitor. A travel expense reimbursement made to an international visitor is not reportable as income if the accountable plan rules are met. If expense reimbursements do not meet the accountable plan rules, the reimbursements are considered income subject to withholding.
The accountable plan rules apply to nonresident aliens as well as to U.S. citizens and resident aliens. This means that payments made to, or on behalf of, nonresident alien persons for the purpose of defraying or reimbursing the deductible travel and lodging expenses of such nonresident alien persons are excludible from the gross income of such nonresident alien persons and are not reportable to the Internal Revenue Service (IRS) by the University of Northern Iowa on the condition that the requirements of the accountable plan rules are met.
The requirements of the accountable plan rules require that the payee:
● Establish the business purpose and connection of the expenses; the travel must be connected to employment or self-employment services (services provided);
● Substantiate the expenses claimed to the payer within a reasonable period of time;
AND
● Return any amounts to the payer which are over and above the substantiated business expenses, or not accounted for within a reasonable period of time. Amounts that are over and above the substantiated business expenses, or not accounted for within a reasonable period of time are reportable to the IRS and subject to withholding.
Travel grants, reimbursements, and/or payments made in regards to a scholarship or fellowship (no services provided) are NOT covered under the IRS accountability rule and therefore are taxable to the recipient.