The United States has income tax treaties with a number of foreign countries. Under these treaties, residents (not necessarily citizens) of foreign countries are taxed at a reduced rate, or are exempt from the U.S. income taxes on certain items of income they receive from sources within the United States. These reduced rates and exemptions vary among countries and specific items of income.
IRS Publication 901, U.S. Tax Treaties will tell you whether a tax treaty between the United States and a particular country offers a reduced rate of, or possibly a complete exemption from, U.S. income tax for residents of that particular country.
You can obtain the full text of tax treaties and accompanying Technical Explanations and Protocols at United States Income Tax Treaties - A to Z.
IRS Tax Treaty Tables provide a summary of many types of income that may be exempt or subject to a reduced rate of tax.
Exemption from Withholding
If a tax treaty between the United States and your country provides an exemption from, or a reduced rate of, withholding for certain items of income, you should notify UMass of your foreign status to claim the benefits of the treaty. Generally, you do this by filing applicable forms with UMass.
Alien students, trainees, teachers, and researchers who perform dependent personal services (as employees) can use Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual to claim exemption from withholding of tax on compensation for services that are exempt from U.S. tax under a U.S. tax treaty.
An alien student, trainee, or researcher may claim a treaty exemption for a scholarship or fellowship by submitting Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding to the payer of the grant. However, 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.
Generally, you must be a nonresident alien student, apprentice, or trainee in order to claim a tax treaty exemption for remittances from abroad (including scholarship and fellowship grants) for study and maintenance in the United States. However, if you entered the United States as a nonresident alien, but you are 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. If you qualify under an exception to the treaty's saving clause and the payor intends to withhold U.S. income tax on the scholarship, fellowship, or other remittance, you can avoid income tax withholding by giving the payor a Form W-9, Request for Taxpayer Identification Number and Certification, with an attachment.
Resident Alien Claiming a Treaty Exemption for a Scholarship or Fellowship.
If you are not a student, trainee, teacher, or researcher, but you perform services as an employee and your pay is exempt from U.S. income tax under a tax treaty, you may be able to eliminate or reduce the amount of tax withheld from your wages. Provide your employer with a properly completed Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual for the tax year. The Form 8233 must report your Taxpayer Identification Number (TIN), generally your U.S. Social Security Number or your Individual Taxpayer Identification Number (ITIN).
If you perform personal services as an independent contractor (rather than an employee) and you can claim an exemption from withholding on that personal service income because of a tax treaty, submit Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, to each withholding agent from whom amounts will be received.