Student Wages and Tax Treaties
The table below indicates which countries have tax treaties with the United States in which some, or all, student wages are tax exempt, considering certain conditions are met.
If a student’s country of residence exists on the table below and they meet the criteria in Column B and Column C, wages qualify for a tax exemption and the following tax form needs to be completed upon hiring:
- Form 8233: Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual.
If a student’s country of residence does not exist on the table below – Form 8233 does not need to be completed.
Description of Table Columns
Column A: Students’ country of permanent citizenship. This is used in completing Form 8233 line 12c.
Column B: Maximum length of exemption. After the maximum years in the USA has been reached, the individual is subject to federal tax withholding.
- EXAMPLE: A student from Egypt has $2,000 of student wages but has been in the United States for 6 years. The $2,000 is subject to taxation because the student has been in the United States over the 5 year limit.
Column C: Maximum earnings for exemption. Earnings above the annual maximum per year are subject to taxation*. The information in Column C is used for completing Form 8233 line 12b.
- *The one exception to this condition is for Canada. Wages below the $10,000 threshold are exempt. However- if wages exceed $10,000, the entire amount is taxable and not just the amount that exceeds $10,000.
- CANADA EXAMPLE: A student from Canada earns $12,000. Because it exceeds the $10,000 threshold amount – the entire $12,000 is taxable.
- OTHER EXAMPLE: A student from China has student wages of $6,000. Because the tax treaty exempts up to $5,000 – only $1000 will be subject to federal taxation.
Column D: The tax treaty article citation. This is used in completing Form 8233 line 12a.
Tax Treaty Table for Student Wages
|
COLUMN A |
COLUMN B |
COLUMN C |
COLUMN D |
Country of
Residence |
Maximum Presence
in USA |
Maximum
Compensation |
Treaty Article
Citation |
BANGLADESH |
NO LIMIT |
$8,000 |
21(2) |
BELGIUM |
NO LIMIT |
$9,000 |
19(1)(b) |
BULGARIA |
NO LIMIT |
$9,000 |
19(1)(b) |
CANADA |
NO LIMIT |
$10,000 |
XX |
CHINA – PEOPLE’S REPUBLIC |
NO LIMIT |
$5,000 |
20(c) |
COMMONWEALTH OF IS® |
5 years |
$10,000 |
VII(1) |
CYPRUS |
5 years |
$2,000 |
21(1) |
CZECH REPUBLIC |
5 years |
$5,000 |
21(1) |
EGYPT |
5 years |
$3,000 |
22(1) |
ESTONIA |
5 years |
$5,000 |
20(1) |
FRANCE |
5 years |
$5,000 |
21(1) |
GERMANY |
4 years |
$9,000 |
20(4) |
ICELAND |
5 years |
$9,000 |
19(1) |
INDONESIA |
5 years |
$2,000 |
19(1) |
ISRAEL |
5 years |
$3,000 |
24(1) |
KOREA |
5 years |
$2,000 |
21(1) |
LATVIA |
5 years |
$5,000 |
20(1) |
LITHUANIA |
5 years |
$5,000 |
20(1) |
MOROCCO |
5 years |
$2,000 |
18 |
NETHERLANDS |
NO LIMIT |
$2,000 |
22(1) |
NORWAY |
5 years |
$2,000 |
16(1) |
PAKISTAN |
NO LIMIT |
$5,000 |
XIII(1) |
PHILIPPINES |
5 years |
$3,000 |
22(1) |
POLAND |
5 years |
$2,000 |
18(1) |
PORTUGAL |
5 years |
$5,000 |
23(1) |
ROMANIA |
5 years |
$2,000 |
20(1) |
SLOVAK REPUBLIC |
5 years |
$5,000 |
21(1) |
SLOVENIA |
5 years |
$5,000 |
20(1) |
SPAIN |
5 years |
$5,000 |
22(1) |
THAILAND |
5 years |
$3,000 |
22(1) |
TRINIDAD & TOBAGO |
5 years |
$2,000 |
19(1) |
TUNISIA |
5 years |
$4,000 |
20 |
VENEZUELA |
5 years |
$5,000 |
21(1) |
- Note (®): This represents the U.S.S.R income tax treaty which includes Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan.
- It is highly recommended that a student visit the following website that summarizes tax treaty benefits to verify their eligibility. http://www.irs.gov/pub/irs-pdf/p901.pdf (Pages 19-28)
- Tax Treaties can be found at http://www.irs.gov/businesses/international/article/0,,id=96739,00.html.
If you have additional questions regarding tax treaties, please call or e-mail the contact below with any questions or to set up an appointment.
Sara Marcotte, Accountant
487-2449
sjmarcot@mtu.edu
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