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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. - PowerPoint PPT Presentation
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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