Tax Treaties

Payments to Foreign Employees

Wages for Students and Trainees (Income code 20)

  • Based on country of residence, NOT country of citizenship. Country of residence is determined by location 365 days prior to coming to the US. If there is a dispute in country of residence, tax treaty benefits will not be honored
  • Must be a student or trainee, as indicated on I-20 or DS-2019
  • Exemption of tax treaty begins the YEAR of arrival
  • Typically a dollar limit and a year limit (exceptions: China, Bangladesh)
  • Treaty is taken on form 8233 and Student Attachment (if a Resident for Tax, treaty is taken on form W-9 and W-9A)
  • Tax treaty is effective on next available payroll, taxes already withheld will not be refunded
  • Tax treaties will not be guaranteed if the employment begins after October 1 if the employee does not have a permanent SSN. Treaty benefits can be claimed when the employee files an annual tax return.
  • Form 8233 and attachment must be original forms (no copies or faxes)
  • Click here for country list.

Wages for Teacher/Researchers (Income code 19)

  • Based on country of residence, NOT country of citizenship. Country of residence is determined by location 365 days prior to coming to the US. If there is a dispute in country of residence, tax treaty benefits will not be honored
  • Must be a professor, teacher or researcher
  • Must be temporarily in the US for the primary purpose of teaching/research
  • Exemption of tax treaty begins the DATE of arrival
  • Typically a year limit only
  • Treaty is taken on form 8233 and Teacher/Researcher Attachment (if a Resident for Tax, treaty is taken on form W-9 and W-9A)
  • Tax treaty is effective on next available payroll, taxes already withheld will not be refunded
  • Tax treaties will not be guaranteed if the employment begins after October 1 if the employee does not have a permanent SSN. Treaty benefits can be claimed when the employee files an annual tax return
  • Form 8233 and attachment must be original forms (no copies or faxes)
  • Click here for country list.

Scholarship and Fellowship Payments (Income code 16)

  • Based on country of residence, NOT country of citizenship. Country of residence is determined by location 365 days prior to coming to the US. If there is a dispute in country of residence, tax treaty benefits will not be honored
  • Must be in the US to study or acquire training/technical experience
  • Exemption of tax treaty begins the YEAR of arrival
  • Typically a year limit only
  • Treaty is taken on form W-8BEN. Country list is located on Page 2 of W-8BEN
  • Tax treaty will not be honored without a permanent Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
  • To receive stipend/fellowship, individual must complete form W-8BEN. However, if the individual does not have an ITIN or SSN at that time, and receives a permanent number and is from a tax treaty country, the individual MUST complete a new W-8BEN form to have the tax treaty honored. Once a new W-8BEN is received (with tax number) any scholarship or fellowship tax withholding for the calendar year will be refunded on the next biweekly payroll

Payments to Foreign Independent Contractors (Income code 16)

  • Based on country of residence, NOT country of citizenship. Country of residence is determined by location 365 days prior to coming to the US. If there is a dispute in country of residence, tax tretay benefits will not be honored
  • Treaty is taken on form 8233 only
  • Treaties can be limited by days of presence or dollar limit
  • Tax treaty benefits will not be honored without a permanent Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
  • Tax treaty documents must be on file at the time of payment. No taxes will be refunded
  • Form 8233 must be original forms (no copies or faxes)
  • Click here for country list.