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    grass2000's Avatar
    grass2000 Posts: 3, Reputation: 1
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    #1

    Oct 8, 2009, 11:39 AM
    Tax treaty of short term scholar in U.S.
    I am a short term scholar in a institute of U.S, and I will be in the institute for half a year. The institute will pay me some money as a consultant, but they said there is a 30% tax withholding of the money, unless a tax treaty with my country, China, entiles a lower rate or exemption. So I am asking if I am qualified for a exemption in this case, since I am not an employee of this institute. Thanks!
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
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    #2

    Oct 8, 2009, 08:10 PM

    Which visa do you have? And for what purpose?
    If you have J1 visa for research, then as per tax treaty, you income is tax free for two years.
    Five Rings's Avatar
    Five Rings Posts: 459, Reputation: 7
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    #3

    Oct 9, 2009, 03:29 AM

    MukatA is correct except that the term is for 3 years not 2.

    The treaty article referring to this benefit is Article 19. Get a copy here if you like:
    http://www.irs.gov/pub/irs-trty/china.pdf

    However, it is a little more complicated. The people paying you are required to withhold the 30% unless you give them a form called W8-BEN which details the treaty exception to the 30% tax.

    Get a copy here and fill it out:
    http://www.irs.gov/pub/irs-pdf/fw8ben.pdf
    Get someone to help you.

    There is more; now you need to get a taxpayer identification number (ITIN):
    http://www.irs.gov/pub/irs-pdf/fw7.pdf

    Find someone to help you with that. See the list of people in the State you live in:
    Acceptance Agent Program
    grass2000's Avatar
    grass2000 Posts: 3, Reputation: 1
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    #4

    Oct 9, 2009, 07:46 AM
    My visa is J1 short term scholar. Am I qualified?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #5

    Oct 9, 2009, 10:17 AM
    Yes, In my opinion you DO qualify.

    Submit the Form W-8BEN to the institute to claim the tax exemption under the treaty.
    Five Rings's Avatar
    Five Rings Posts: 459, Reputation: 7
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    #6

    Oct 9, 2009, 01:57 PM

    You have to get an ITIN to claim a treaty exemption.

    Moreover, you will need to have an ITIN to reclaim tax withheld in error if and when you file your 1040NR to reclaim that withheld tax.
    mack20007's Avatar
    mack20007 Posts: 78, Reputation: 5
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    #7

    Oct 11, 2009, 05:42 AM

    Actually form 8233 is completed in this instance, not Form W-8Ben. The school may take it and allow the exemption anyway, regaradless.

    However, F 8233 is completed for NRA not employees, who are independent contractors. Grass2000 states he is a lecturer, and not an employee, so form 8233 would be appropriate. (An Itin will be needed at the time this form is given to the school)

    The other information appears to be correct, he appears to qualify, and would need an Itin. And an excellent refererence in the treaty was given. As was stated however, he may need to complete F1040NR on April 15th and attach 1042S showing the withholding, and stating this exemption on page 5, item M, to allow the IRS to refund the amount withheld at that time.
    Since the school goes ahead with the withholding and due to time getting the ITIN etc.
    Five Rings's Avatar
    Five Rings Posts: 459, Reputation: 7
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    #8

    Oct 11, 2009, 09:57 AM

    That's very good mack20007; I was not aware of the 8233 thing. Thank you for that information.

    At least he can stop the withholding until his number comes through.
    grass2000's Avatar
    grass2000 Posts: 3, Reputation: 1
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    #9

    Oct 12, 2009, 02:37 PM
    Wow, I am quite confused.
    I talked with the guy in the international office. He gave me an account name to login online-tax.net
    And he asks me to print W-8Ben form and submit that to the university.

    Since I was here for a period of 16 months before, that's from Sep 2007 to Dec 2008, do I have to pay tax for the year 2011? Since I have been here for two calender years.

    Thanks!
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