A tax treaty is an agreement between the United States and a foreign country that exempts nonresident aliens of the United States from federal taxes. These treaties protect nonresident aliens from having to pay taxes on United States based income in the United States. Visitors who claim exemption under a tax treaty will have to pay taxes for their United States based income in their home country.
The existence of a tax treaty does not automatically exempt an individual from paying taxes. An individual must meet the qualifications for exemption as set forth in the treaty article.
There are separate tax treaties for students and teachers/researchers. Student exemptions from withholding exist for several countries but are limited to specific dollar amounts per calendar year. Most treaties specify a limited number of years that an individual is eligible for the exemption.
The Internal Revenue Service enforces strict regulations concerning tax treaty exemption. Listed below are these regulations as they apply to employees. They will be strictly enforced.
- Only the most current version of the form 8233 will be accepted. Forms are available from the Payroll Office, or they can be retrieved from our web site.
- A tax treaty statement for the appropriate country must also be completed. These forms can also be obtained from the Payroll Office or retrieved from our web site.
- All forms should be as complete and legible as possible.
- Send completed forms to Payroll Office for forwarding to the IRS.
- There is a ten working day waiting period from the time Payroll submits the forms to the IRS until the exemption can be granted.
- The forms are valid for one calendar year. New forms must be submitted every year that the treaty is in effect. The deadline is December 10. If the forms are not submitted by this date, federal taxes will be withheld beginning with December earnings paid January 1. According to IRS regulations, the taxwill not be refunded even when the forms are submitted.