TAX TREATIES

TAX TREATIES

Sara Marcotte

Accountant

Accounting Services

UNITED STATES INCOME TAX

A tax that the government imposes on income earned by individuals.

Income tax is a key source of funds that the U.S. government uses to fund its activities and serve the public.

Income tax is “withheld” from wages.

Can be referred to as “federal withholdings”

WHAT IS A TAX TREATY?Formal written agreement between

countries

U.S. has tax treaties with a number of countries

Residents of foreign countries are taxed at a reduced income tax rate or exempt from U.S. taxes on certain types of income

TAX TREATIES -CONTINUED

Not all countries have tax treaties

Not all tax treaties are the same. Each country has their own “agreement” with the United States.

TAX TREATIES & STUDENT WAGES

Some countries have tax treaties with the United States that exempt student wages from income tax.

Certain conditions need to be met in order for student wages to be exempt:1) Length of time in the United States2) Amount of Earnings

http://www.admin.mtu.edu/acct/dept/tax/nrstudentwages.htm

FORM 8233

Qualify for tax treaty? Fill out form 8233

Form 8233 is a form that exempts your wages from income tax. There will be no “withholdings” from the wages you earn.

Must be filled out annually.

http://www.admin.mtu.edu/acct/dept/tax/8233info.htm

WHAT IF 8233 IS NOT COMPLETED?

When you file tax return at the end of the year – you can be refunded the income tax that was “withheld”.

HELPFUL WEBSITES

Tax Treaties: http://www.irs.gov/businesses/international/article/0,,id=96739,00.html

Summary of Tax Treaties:http://www.irs.gov/pub/irs-pdf/

p901.pdf

Student Wages & Form 8233:http://www.admin.mtu.edu/acct/

dept/tax/nrstudentwages.htm

QUESTIONS?

SEE ME!

Sara Marcottesjmarcot@mtu.edu

487-2449