Tax Treaties

Federal

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 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.

If the treaty does not cover a particular kind of income, or if there is no treaty between your country and the United States , you must pay tax on the income in the same way and at the same rates shown in the tax table for the Form 1040NR and Form 1040NR-EZ.

You must also review Publication 519, U.S. Tax Guide for Nonresident Aliens before claiming any tax treaty benefits.

State

Many of the individual states of the United States tax the income of their residents. Some states honor the provisions of U.S. tax treaties and some states do not. Therefore, you should consult the tax authorities of the state in which you live to find out if that state taxes the income of individuals and, if so, whether the tax applies to any of your income, or whether your income tax treaty applies in the state in which you live.

Resources

You should carefully examine the specific treaty articles that may apply to find if you are entitled to a tax credit, tax exemption, reduced rate of tax, or other treaty benefit or safeguard. For more information please see Publication 519 and Publication 901. If you wish to see a complete copy of the U.S. income tax treaty with your country on the IRS web site, click here.

For more information or to review the provisions for a specific country, please review the IRS Publication 901.