Tax Treaties

Last updated: February 7, 2007

If you earned wages (as reported on form W-2) during 2006 and are a national of a country which has a tax treaty with the U.S. that includes a personal services provision for students, you may be able to deduct that tax treaty amount on your tax form. How do you find out whether your country HAS a tax treaty with the U.S. that allows such a deduction and additional details regarding the deduction? Consult IRS Publication 901 (U.S. Tax Treaties) available on line. Be sure that you are referencing the correct section of the publication; tax treaty provisions for students.

The following countries permit their nationals who are students in the U.S. to protect a portion of their wages from income tax: Belgium, Canada, China, Cyprus, Czech Republic, Egypt, France, Germany, Iceland, Indonesia, Israel, Japan, Korea, Morocco, Netherlands, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Slovak Republic, Spain, Thailand, Trinidad & Tobago, Tunisia. However, the rules vary by country. Another good source of information in tax treaties is the worldwide website of Windstar Technologies, which has posted the entire text of tax treaties for each country. Point your browser to http://www.windstar-tech.com

If you have a qualifying scholarship or fellowship grant and are from one of the following countries, you may be able to protect all or part of your grant from tax: Austria, Belgium, China, Commonwealth of Independent States *, Cyprus, Czech Republic, Egypt, France, Germany, Iceland, Indonesia, Israel, Japan, Republic of Korea, Morocco, Netherlands, Norway, Philippines, Poland, Romania, Russia, Slovak Republic, Spain, Trinidad & Tobago and Tunisia. (* This treaty is in effect for Armenia, Azerbaijan, Belarus, Georgia, Kyrgystan, Moldova, Turkmenistan, Ukraine, and Uzbekistan.)

If you are a student from India, click here for information on the U.S. tax treaty with India.

Quite a few students are eligible to claim a tax treaty deduction, because their country has a treaty with the U.S. The tax treaty amount is sometimes shown on a form 1042-S. However, at Rensselaer, many students have all of their wages reported on their form W-2, and want to know how to complete form 1040NR EZ correctly to claim their tax treaty deduction. Here's how to do it.

Let's assume, for the sake of this example, that you are permitted to claim $2000 as your tax treaty amount to be deducted from wages. Subtract your tax treaty amount from your salary and wages as reported on your form W-2. Write the difference on line 3 of form 1040NR EZ. If your tax treaty amount is more than your salary as reported on your W-2, put zero on line 3. Then indicate the tax treaty amount on line 6. (You can verify your country's tax treaty information by consulting IRS Publication 901, U.S. Tax Treaties.) Be sure you are consulting the section which summarizes tax treaties benefits for students. Then, be sure to answer question j page 2 completely. Again, the rules vary by country.

The ISSS staff are neither qualified nor permitted to give individual tax advice. Tax information is available only at tax seminars.