Income Tax treaty
All compensatory payments made to international short-term visitors or independent contractors are taxable at 30%. Some countries have tax treaty agreements with the United States that may reduce or exempt an individual from certain taxes.
The existence of a tax treaty between the U.S. and a visitor’s home country does not guarantee that the visitor may take advantage of any benefits. Entry into the U.S. on the wrong visa (even if later corrected by appeal to USCIA) or trips to the U.S. on a different visa in a previous year can disqualify a visitor from the benefits of the treaty.
Tax treaties may specify limits on exemptions. An individual may be exempt for a certain period of time or for a certain amount of earnings. In a few cases, staying longer than the exempt period or earning more money than the exemption allows can have severe penalties.
If Whitman rejects the exemption application, international visitors may be able to appeal directly to the IRS. This appeal may be part of filing a 1040NR, or it may be a separate process. Whitman employees cannot be involved in individual appeals directly to the IRS. International visitors wishing to appeal for a withholding exemption should consult a tax lawyer or their local IRS office for assistance.
For more information, go to: IRS Publication 901: U.S. Tax Treaties.
How to Apply for Tax Treaty Benefits:
The department should submit the following information to the Business Office:
- Copy of the I-94 Departure Card (usually stapled to the passport).
- Copy of the current U.S. visa page from the visitor’s passport.
- Copy of the identification page of the visitor’s passport.
- Copy of visitor’s social security card (SSN) or individual taxpayer identification card (ITIN), or proof that the visitor has submitted an application for one of these numbers. If the visitor does not have a US tax ID or refuses to apply for one, they are not eligible to apply for tax treaty benefits.
- Copy of the visitor’s I-20 (for F-1 students) or DS-2019 (if J-1 visa holders).
- For J-1 visa holders only: Letter of permission from sponsoring university if other than Whitman College.
If it is determined that the visitor may qualify for reduced or exempt tax rates, then the visitor must complete Form 8233, Part 1 and submit the form to the Business Office. When the Business Office receives the signed Form 8233, the form is sent to the IRS for review. The IRS reserves the right to reject Form 8233 and require Whitman College to withhold taxes at 30%.
Form 8233 is good for one calendar year. Employees will have to submit their immigration documentation at the end of every calendar year to renew their tax treaty benefits.
Updated: August 2009