Treaty Benefits
Information Pages Regarding Treaty Benefits
[Reviewed 3/25/2024]
See IRS Pub 4011, pdf pages 15-17 for summary charts of treaty benefits related to students and scholars.
Claiming Tax Treaty Benefits
See IRS page: Claiming Tax Treaty Benefits and Claiming Treaty Exemption for a Scholarship or Fellowship Grant
You will use IRS 8233 to claim treaty benefits for employment income.
You will use IRS W-8BEN to claim treaty benefits for taxable portions of scholarship or grants.
NOTE: a scholarship or fellowship recipient who receives wages and a scholarship or fellowship from the same institution, both of which are exempt from tax under a tax treaty, can claim treaty exemptions on both kinds of income on Form 8233,
If you claim treaty benefits, federal taxes will not be withheld on amounts up to the maximum of your treaty benefit.
If you did not claim treaty benefits, you will still claim the treaty benefit when you file your 1040-NR.
Either way, your benefit and tax will be the same.
Some quotes from the above IRS articles.
accessed March 25, 2024
Income
"For income that is not earned from personal services, the payee files Form W-8BEN. For income earned from personal services, the payee files Form 8233."
". . . if the payee entered the United States as a nonresident alien but is now a resident alien for U.S. tax purposes, the treaty exemption will continue to apply if the tax treaty has an exception to the treaty's saving clause."
"The payee does not have to file Form 8833 [different from 8233] for any of the following situations:"
"2. The payee can claim a treaty exemption that reduces or modifies the taxation of income from dependent personal services, pensions, annuities, social security and other public pensions, or income of artists, athletes, students, trainees, or teachers. This includes taxable scholarship and fellowship grants."
Scholarships or Grants
"If a scholarship or fellowship recipient does not have a TIN at the time he or she claims a tax treaty exemption on Form 8233, he or she must apply for one . . . " see article for details.
Also see Claiming Tax Treaty Benefits if:
You are a nonresident alien married to resident.
Claiming Tax Treaty Benefits After You Are a Resident Alien
See Claiming Treaty Exemption for a Scholarship or Fellowship Grant
QUESTION: Does this also apply to Income Code 19 & 20 (Scholars and Students) or only Income Code 16 (Scholarships and Grants). Note: I have been unable to find any IRS page that applies this to
Nonresident Alien Who Becomes a Resident Alien
"A student (including a trainee or business apprentice) or researcher who has become a resident alien for U.S. federal tax purposes may be able to claim benefits under a tax treaty that apply to reduce or eliminate U.S. federal tax on scholarship or fellowship grant income."
Claiming Treaty Exemption on the 1040 Tax Return
"If the income has been reported as taxable income on a Form-W-2, Form 1042, Form 1099 or other information return, the scholarship or fellowship recipients who are resident aliens for the tax year should generally report the income on line 1 of Form 1040, then enter the amount as a negative number for which treaty benefits are claimed on Schedule 1 (1040), line 8z. Enter “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption."
PSU HR Page
Nonresident Alien Guidelines & Tax Treaties
See this page for links to documents you would sign to claim treaty benefits.
IRS.GOV
Including:
IRS Table 2 (data gathered from IRS Pub 901?) Compensation for Personal Services Performed in United States Exempt from U.S. Income Tax Under Income Tax Treaties
Table 2 lists the different kinds of personal service income that may be fully or partly exempt from U.S. income tax. The income code numbers shown in this table are the same as the income codes on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. You must meet all of the treaty requirements before the item of income can be exempt from U.S. income tax.
IRS Table 3 - list of countries that have tax treaties with the United States
Updated through June 30, 2020, this table lists the countries that have tax treaties with the United States. This table also shows the general effective date of each treaty and protocol. A protocol is an amendment to a treaty. It is important that you read both the treaty and the protocol(s) that would apply to the tax year in which the payment is made. You can obtain the full text of these treaties at United States Income Tax Treaties - A to Z.
United States Income Tax Treaties - A to Z
Question: Do treaty benefits apply to self-employment income?
I'm not sure. Anecdotal NOTE: Sprintax applied the treaty benefit to the self-employment income on the return of a student from China. (noted March 18, 2021)