Division of Financial Services
Tax
When engaging in foreign activities, one concern any business operation has is double taxation. Double taxation occurs when one source of income is taxed twice. Regarding foreign-earned income, double taxation occurs when the monies received in connection with the foreign country are subject to taxes in the United States as well as in that foreign country. This concern applies to the university as a whole and to any individuals providing services for Cornell in foreign countries. This page provides general information regarding double taxation concerns on international activities, as each country has its own set of tax laws and guidelines.
If you have questions related to these tax concepts, please contact us at tax@cornell.edu. If you would like specific guidance, please submit your questions or concerns using the form on the Navigate website.
The foundation of the double taxation laws between the United States and foreign countries are the Income Tax Treaties created between our U.S. government and foreign governments. If there is no treaty between the U.S. and a foreign country, the foreign-sourced income may be taxed by the United States as well as by the foreign country in which there is no income tax treaty. Having a treaty between the U.S. and a foreign country does not automatically preclude us from any double taxation concerns, however. Each income tax treaty is different, just as the tax laws are different in each country. Any and all analyses will need to be handled on a case-by-case basis.
To qualify for income tax treaty benefits, we will be asked to provide proof of residency, which is done by providing tax form 6166. In some countries, specific verbiage is used on the form that cannot be used in other countries. When requesting this form from the Tax Office, please specify the country requesting it so that we may provide the correct version.
Whether they are employees or independent contractors, individuals engaged through Cornell University have similar concerns for their own taxes. Any U.S. citizen or resident alien is taxed on their worldwide income, whether it was earned within or outside of the United States. Individuals are subject to the same income tax treaty laws that apply to Cornell University. For more information on these treaties, please see IRS Publication 901.
In addition to income tax concerns, there are also concerns of other taxes which are often labeled as “social benefit” taxes. In the United States, these taxes are known as Social Security and Medicare, among others. Other countries have similar taxes with similar withholding and reporting requirements as we do in the United States. In order for an individual to avoid double taxation on social benefits by the U.S. and the foreign country, a totalization agreement must be utilized. Similar to the guidelines of income tax treaties, if there is no totalization agreement between the U.S. and a foreign country and payments are deemed to be subject to social benefit taxes of that country, they would be liable for both country’s taxes.
