Instructions for Form 8233 (Rev. June 2011)

Transcription

1 Instructions for Form 8233 (Rev. June 2011) Department of the Treasury Internal Revenue Service (Use with the March 2009 revision of Form 8233.) Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual General Instructions Giving Form 8233 to the Withholding Agent Islands, or American Samoa is a nonresident alien individual. Section references are to the Internal Revenue Code unless otherwise noted. You must complete Form 8233: For more information on the tests used to determine resident alien or If you are a resident of a treaty For each tax year (be sure to specify nonresident alien status, see Pub. 519,! country, you must know the the tax year in the space provided U.S. Tax Guide for Aliens. terms of the tax treaty between above Part I of the form), the United States and the treaty country For each withholding agent, and Even though a nonresident alien to properly complete Form For each type of income. However,! individual married to a U.S. you can use one Form 8233 to claim a citizen or resident alien may Purpose of Form tax treaty withholding exemption for choose to be treated as a resident alien In general, section 1441 requires 30% both compensation for personal for certain purposes (for example, filing income tax withholding on services (including compensatory a joint income tax return), such compensation for independent personal scholarship or fellowship income) and individual is still treated as a services (defined later). Sections 1441, noncompensatory scholarship or nonresident alien for withholding tax 3401, and 3402 require withholding, fellowship income received from the purposes on all income except wages. sometimes at 30% and sometimes at same withholding agent. graduated rates, on compensation for U.S. Person dependent personal services (defined Give the form to the withholding later). However, some payments may agent. The withholding agent s For purposes of this form, a U.S. be exempt from withholding because of responsibilities are discussed in the person is a U.S. citizen or resident a tax treaty or because the payments Part IV instructions. alien. are not more than your personal exemption amount (defined later). Example. A nonresident alien is Tax Treaty Withholding Complete and give Form 8233 to your primarily present in the United States Exemption withholding agent if some or all of your as a professor, but also is occasionally compensation is exempt from This term refers to an exemption from invited to lecture at another educational withholding. withholding permitted by IRS institution. These lectures are not regulations under section 1441 that is You can use Form 8233 to claim a connected with his teaching obligations based on a tax treaty benefit. See tax treaty withholding exemption for but are in the nature of Resident of a Treaty Country next for noncompensatory scholarship or self-employment. For each tax year, the requirements for claiming a tax treaty fellowship income only if you also are professor must complete two Forms benefit on this form. claiming a tax treaty withholding 8233 and give one to each withholding exemption for compensation for agent to claim tax treaty benefits on the See the instructions for line 4 for personal services (including separate items of income. additional information for determining compensatory scholarship or fellowship residence for purposes of claiming a tax income) received from the same treaty withholding exemption on this withholding agent. Definitions form. Do not use Form 8233 if you! have an office in the United Nonresident Alien Resident of a Treaty Country States regularly available to you If you are an alien individual (that is, an An alien individual may claim to be a for performing personal services. individual who is not a U.S. citizen), resident of a treaty country if he or she Additional information. You can specific rules apply to determine if you qualifies as a resident of that country download the complete text of most are a resident alien or a nonresident under the terms of the residency article U.S. tax treaties at IRS.gov. Enter tax alien for tax purposes. Generally, you of the tax treaty between the United treaties in the search box. Technical are a resident alien if you meet either States and that country. See explanations for many of those treaties the green card test or the substantial Nonresident Alien, earlier. are also available on that site. Also, see presence test for the calendar year. Pub. 901, U.S. Tax Treaties, for a quick Any person not meeting either test is A nonresident alien may claim a tax reference guide to the provisions of generally a nonresident alien. treaty benefit on this form only if that U.S. tax treaties. You can get any of Additionally, an alien individual who individual is the beneficial owner of the the forms or publications referred to in qualifies as a resident of a treaty income and meets the residency these instructions by calling country (defined later) or a bona fide requirement and all other requirements TAX-FORM ( ) or resident of Puerto Rico, Guam, the for benefits under the terms of the by downloading them from Commonwealth of the Northern tax treaty. formspubs. Mariana Islands, the U.S. Virgin Jun 07, 2011 Cat. No B

2 Compensation for Independent Personal Services Compensation for such services includes wages, salaries, fees, bonuses, commissions, and similar designations for amounts paid to an employee. Compensatory Scholarship or Fellowship Income In general, scholarship or fellowship Independent personal services are income is compensatory to the extent it services performed as an independent represents payment for past, present, contractor in the United States by a Required Withholding Form(s) or future services (for example, nonresident alien who is self-employed Complete Form 8233 for compensation teaching or research) performed by a rather than an employee. you receive for dependent personal nonresident alien as an employee and Compensation for such services services only if you are claiming a tax the performance of those services is a includes payments for contract labor; treaty withholding exemption for part or condition for receiving the scholarship payments for professional services, all of that income. Do not use Form or fellowship (or tuition reduction). such as fees to an attorney, physician, 8233 to claim the daily personal Example. XYZ University awards a or accountant, if the payments are exemption amount. For compensation scholarship to N, a nonresident alien made directly to the person performing for which you are not claiming a tax student. The only condition of the the services; consulting fees; honoraria treaty withholding exemption, use Form scholarship is that N attends classes paid to visiting professors, teachers, W-4, Employee s Withholding and maintains a minimum level of researchers, scientists, and prominent Allowance Certificate. academic performance. The speakers; and generally, payments for scholarship income is not performances by public entertainers. Completing Form W-4. You should compensatory because N is not Business profits. Certain treaties do complete Form W-4 as follows: required to perform services as an not have an independent personal employee as a condition for receiving Line 2. You are required to enter a services article. Payments for the scholarship. social security number (SSN) on line 2 independent personal services may be of Form W-4. If you do not have an Required Withholding Form(s) covered under the business profits SSN but are eligible to get one, you article of an applicable income tax Compensatory scholarship or fellowship should apply for it. Get Form SS-5, treaty. If you are eligible to claim income is considered to be dependent Application for a Social Security Card, exemption from withholding on this type personal services income. Therefore, online at from of income, complete and give Form complete Form 8233 for this income your local Social Security 8233 to the withholding agent. only if you are claiming a tax treaty Administration (SSA) office, or by withholding exemption for part or all of Public entertainers. Special calling the SSA at that income. Do not complete Form restrictions on exemption from or 8233 to claim the daily personal reduction of withholding apply to You cannot enter an individual exemption amount. nonresident alien public entertainers! taxpayer identification number (such as actors, musicians, artists, and For any part of this compensatory (ITIN) on line 2 of Form W-4. athletes). Generally, Form 8233 cannot income for which you are not claiming a be accepted because the exemption Line 3. Check the single box tax treaty withholding exemption, use may be based on factors that cannot be regardless of your actual marital status. Form W-4. See Completing Form W-4, determined until after the end of the earlier. Line 5. In most cases, you should year. These individuals are subject to claim one withholding allowance. Noncompensatory 30% withholding from gross income However, if you are a resident of paid for personal services performed Scholarship or Fellowship Canada, Mexico, or South Korea; a unless a reduced rate of withholding is Income student from India; or a U.S. national; applied for using Form 13930, you may be able to claim additional Noncompensatory scholarship or Application for Central Withholding withholding allowances for your spouse fellowship income is scholarship or Agreement. In addition, many tax and children. See Pub. 519 for more fellowship income that is not treaties contain separate articles that information. compensatory scholarship or fellowship apply to public entertainers. If present, income (defined earlier). these articles take precedence over the If you are completing Form W-4 for In most cases, the taxable portion of independent personal services and more than one withholding agent (for noncompensatory scholarship or dependent personal services articles example, you have more than one fellowship income (defined later) paid to of the treaties. employer), figure the total number of a nonresident alien is subject to Required Withholding Form allowances you are entitled to claim withholding at a rate of 30% (in most (see the previous paragraph) and claim cases, the rate is 14% for a nonresident For compensation you receive for no more than that amount on all Forms alien temporarily present in the United independent personal services, W-4 combined. Your withholding States under an F, J, M, or Q complete Form 8233 to claim a tax usually will be most accurate when all visa). treaty withholding exemption for part or allowances are claimed on the Form all of that income and/or to claim the Taxable portion of noncompensatory W-4 for the highest-paying job and zero daily personal exemption amount. scholarship or fellowship income. If allowances are claimed on the others. you were a degree candidate, the Compensation for Line 6. Write nonresident alien or amount of this type of income that you NRA above the dotted line on line 6. If used for expenses other than tuition you would like to have an additional and course-related expenses (fees, amount withheld, enter the amount on books, supplies, and equipment) is Dependent personal services are line 6. taxable in most cases. For example, in services performed as an employee in most cases amounts used for room, the United States by a nonresident Line 7. Do not claim that you are board, and travel are taxable. If you alien. Dependent personal services exempt from withholding on line 7 of were not a degree candidate, the full include compensatory scholarship or Form W-4 (even if you meet both of the amount of the scholarship or fellowship fellowship income (defined later). conditions listed on that line). income is taxable in most cases. Dependent Personal Services -2-

3 Required Withholding Form person is receiving the income as a usually takes about 6 to 10 weeks to In most cases, you should complete nominee, agent, or custodian, or to the get an ITIN. Form W-8BEN, Certificate of Foreign extent the person is a conduit whose For details on how to apply for an Status of Beneficial Owner for United participation in a transaction is ITIN, see Form W-7 and its instructions. States Tax Withholding, to claim a tax disregarded. In the case of amounts Get Form W-7 online at IRS.gov. Click treaty withholding exemption for this paid that do not constitute income, on Individuals, then Individual Taxpayer type of income. No Form W-8BEN is beneficial ownership is determined as if Identification Numbers. required unless a treaty benefit is being the payment were income. If you have applied for an SSN or claimed. ITIN but have not yet received it, you Avoid Common Errors Exception. If you are receiving both may attach a copy of a completed Form compensation for personal services To ensure that your Form 8233 is W-7 or SS-5 showing that a number (including compensatory scholarship or promptly accepted, be sure that you: has been applied for. fellowship income) and Answer all applicable questions completely. An ITIN is for tax use only. It noncompensatory scholarship or Specify the tax year for which this! does not entitle you to social fellowship income from the same form will be effective in the space security benefits or change your withholding agent, you may use one provided above Part I of the form. employment or immigration status Form 8233 for both types of income. Enter your complete name, under U.S. law. However, this exception applies only if you are claiming a tax treaty addresses, and identifying number(s) in Line 3 withholding exemption for both types of Part I. Have attached the required If your country of residence for tax income. statement described in the line 10 purposes has issued you a tax Alternate withholding election. A instructions if you are a foreign student, identifying number, enter it here. For withholding agent may elect to withhold trainee, professor/teacher, or example, if you are a resident of on the taxable portion of researcher. Canada, enter your Social Insurance noncompensatory scholarship or Are not trying to claim tax treaty Number. fellowship income of a nonresident benefits for a country with which the alien temporarily present in the United Line 4 United States does not have a ratified States under an F, J, M, or Q visa tax treaty. Your permanent residence address is as if it were compensatory scholarship Are not trying to claim tax treaty the address in the country where you or fellowship income (provided the benefits that do not exist in your treaty. claim to be a resident for purposes of nonresident alien is not claiming treaty Complete lines 11 through 14 in that country s income tax. If you are benefits with respect to that income). sufficient detail to allow the IRS to completing Form 8233 to claim a tax The withholding agent makes this determine the tax treaty benefit you are treaty withholding exemption, you must election by requesting that the claiming. determine your residency in the manner nonresident alien complete Form W-4 Claim the proper number of personal required by the treaty. Do not show the using the instructions in Rev. Proc. exemptions on line 15. address of a financial institution, a post 88-24, C.B Indian Complete the required certification in office box, or an address used solely students also should see Rev. Proc. Part III. for mailing purposes. If you are an 93-20, C.B individual who does not have a tax residence in any country, your Withholding Agent permanent residence is where you Any person, U.S. or foreign, that has Specific Instructions normally reside. control, receipt, or custody of an Most tax treaties that provide for a amount subject to withholding or that Part I tax treaty withholding exemption require can disburse or make payments of an that the recipient be a resident of the amount subject to withholding is a Line 2 treaty country at the time of, or withholding agent. The withholding immediately prior to, entry into the agent may be an individual, You are required to furnish a U.S. United States. Thus, in most cases, a corporation, partnership, trust, taxpayer identifying number on this student or researcher can claim the association, or any other entity, form. In most cases, you are required withholding exemption even if he or she including (but not limited to) any foreign to enter your social security number no longer has a permanent address in intermediary, foreign partnership, and (SSN) on line 2. See Line 2 in the treaty country after entry into the U.S. branch of certain foreign banks Completing Form W-4 for instructions United States. If this is the case, you and insurance companies. In most on how to get an SSN. may provide a U.S. address on line 4 cases, the person who pays (or causes If you do not have an SSN and are and still be eligible for the withholding to be paid) the amount subject to not eligible to get one, you must get an exemption if all other conditions withholding to the nonresident alien individual taxpayer identification required by the tax treaty are met. You individual (or to his or her agent) must withhold. number (ITIN). To apply for an ITIN, file Form W-7, Application for IRS also must identify on line 12a and/or line 13b the tax treaty country of which Beneficial Owner Number, with the IRS. In most cases, Individual Taxpayer Identification you were a resident at the time of, or immediately prior to, your entry into the For payments other than those for you apply for an ITIN when you file your United States. which a reduced rate of withholding is tax return for which the ITIN is needed. claimed under an income tax treaty, the However, if the reason for your ITIN Line 6 beneficial owner of income is in most request is because you need to provide Enter your U.S. visa type. For example, cases the person who is required under Form 8233 to the withholding agent, foreign students are usually granted an U.S. tax principles to include the you must file Form W-7 and provide F-1 visa. Foreign professors, income in gross income on a tax return. proof that you are not eligible for an teachers, or researchers are usually A person is not a beneficial owner of SSN (your Form SS-5 was rejected by granted a J-1 visa. Business/ income, however, to the extent that the SSA) and include a Form It vocational trainees are usually granted -3-

4 an M-1 visa; however, some persons Part II Line 13b granted a J-1 visa also may be Enter the specific treaty and article on considered business/vocational Line 11a which you are basing your claim for trainees (for example, a person admitted to complete a postgraduate residency in medicine). If you do not have, or do not require, For compensation for independent personal services, examples of acceptable descriptions to enter on this line include: Consulting contract to design software or give three lectures at XYZ University. a visa, write None. Line 14 exemption from withholding (for example, U.S./Germany tax treaty, Article 20(3) ). Provide sufficient facts to justify the Spouses and dependents For compensation for dependent exemption from withholding claimed on! admitted on secondary visas personal services, examples of line 12 and/or line 13. Be sure you (for example, F-2, J-2, H-4, acceptable descriptions to enter on this provide enough details to allow the IRS and O-3 visas) usually are not eligible line include: to determine the tax treaty benefit you to claim the same treaty benefits as the A nonresident alien student may are claiming. primary visa holder. enter part-time library assistant, part-time restaurant worker, or Line 8 teaching one chemistry course per In most cases, you are required to semester to undergraduate students. enter your date of entry into the United A nonresident alien professor or States that pertains to your current teacher may enter teaching at ABC Do not complete lines 15 through 18 if nonimmigrant status. For example, University. you are claiming an exemption from enter the date of arrival shown on your A nonresident alien researcher may withholding based on the business current Immigration Form I-94, enter research at ABC University s profit article of a treaty or claiming on Arrival-Departure Record. school for liquid crystal research. line 12b that all of the compensation Lines 15 through 18 (for certain independent personal services) A nonresident alien business/ you are receiving for independent Exception. If you are claiming a tax vocational trainee may enter treaty benefit that is determined by personal services is exempt from neurosurgical residency at ABC reference to more than one date of withholding. Hospital or one-year internship in arrival, enter the earlier date of arrival. hydraulic engineering at XYZ For example, you are currently claiming Line 15 Corporation. treaty benefits (as a teacher or a For compensation for independent researcher) under article 15 of the tax Line 11b personal services for which an treaty between the United States and exemption from withholding is not Norway. You previously claimed treaty Enter the total amount of compensation available, 30% must be withheld from benefits (as a student) under article for personal services you will receive that compensation after subtracting the 16(1) of that treaty. Under article 16(4) from this withholding agent during the value of one personal exemption. In of that treaty, the combination of tax year. Enter an estimated amount if most cases, you will enter 1 on line exemptions under articles 15 and 16(1) you do not know the exact amount. 15; however, if the exception described may not extend beyond 5 tax years next applies to you, enter the total from the date you entered the United Line 12a number of personal exemptions you are States. If article 16(4) of that treaty Enter the specific treaty and article on entitled to on line 15. applies, enter on line 8 the date you which you are basing your claim for entered the United States as a student. exemption from withholding (for Exception. If you are a resident of example, U.S./Germany tax treaty, Canada, Mexico, or South Korea; a Line 9a Article 20(4) or U.S./Belgium tax student from India; or a U.S. national; treaty, Article 7 (business profits) ). you may be able to claim additional Enter your current nonimmigrant status. personal exemptions for your spouse For example, enter your current Line 12b and children. See Pub. 519 for more nonimmigrant status shown on your If all income received for the services information. current Immigration Form I-94. performed to which this Form 8233 applies is exempt, write All. If only part Lines 16 and 17 Line 9b is exempt, enter the exact dollar Each allowable personal exemption Enter the date your current amount that is exempt from withholding. must be prorated for the number of nonimmigrant status expires. For days during the tax year you will example, you may enter the date of Line 12c perform the personal services in the expiration shown on your current Generally, you may claim a withholding United States. Enter the number of Immigration Form I-94. Enter DS on exemption based on a U.S. tax treaty days on line 16 that pertain to the line 9b if the date of expiration is based with the country in which you claim independent personal services on duration of status. permanent (or indefinite) residence. described in line 11a. To figure the This is the foreign country in which you daily personal exemption amount to Line 10 live most of the time. It is not enter on line 17, divide the personal Nonresident alien students, trainees, necessarily the country of your exemption amount for the tax year professors/teachers, and researchers citizenship. For example, you are a ($3,700 for 2011) by 365 (366 for leap using Form 8233 to claim a tax treaty citizen of Pakistan but maintain your year) and multiply the result by the withholding exemption for home in England. You cannot claim a amount you entered on line 15. For compensation for personal services withholding exemption based on the example, if you are entitled to one must attach to Form 8233 a statement. U.S./Pakistan tax treaty. Any personal exemption for 2011, enter The format and contents of the required withholding exemption you claim must $10.14 (that is, $3,700 / 365 days = statements are shown in Appendix A be based on the U.S./United Kingdom $10.14 x 1 personal exemption = and Appendix B in Pub tax treaty. $10.14) on line

5 Part IV not yet paid. Also, if you are notified by U.S. commonwealths and possessions the IRS that the nonresident alien s for use in administering their tax laws. Withholding Agent s eligibility for the exemption from We may also disclose this information withholding is in doubt or that the to other countries under a tax treaty, to Responsibilities nonresident alien is not eligible for federal and state agencies to enforce When the nonresident alien individual exemption from withholding, you must federal nontax criminal laws, or to gives you Form 8233, review it to see if begin withholding immediately. See federal law enforcement and you are satisfied that the exemption Regulations section (b)(2)(iii) intelligence agencies to combat from withholding is warranted. If you for examples illustrating these rules. terrorism. If a nonresident alien fails to are satisfied, based on the facts If you submit an incorrect Form provide a properly completed form, the presented, complete and sign the 8233, you will be notified by the IRS withholding agent cannot accept it and certification in Part IV. that the form submitted is not is required to withhold. If a withholding You will need three copies of the acceptable and that you must begin agent accepts a Form 8233 as completed Form Each copy of withholding immediately. Examples of completed and later finds that any of Form 8233 must include any incorrect Forms 8233 include: the facts or statements made on the attachments submitted by the Any Form 8233 that claims a tax form are false, or that a nonresident nonresident alien individual. Give one treaty benefit that does not exist or is alien s eligibility for the exemption is in copy of the completed Form 8233 to obviously false. doubt, the withholding agent is required the nonresident alien individual. Keep a Any Form 8233 that has not been to notify the IRS and begin withholding; copy for your records. Within 5 days of completed in sufficient detail to allow failure to do so may result in penalties. your acceptance, forward one copy to: determination of the correctness of the You are not required to provide the tax treaty benefit or exemption claimed. information requested on a form that is Department of the Treasury subject to the Paperwork Reduction Act Internal Revenue Service Signature unless the form displays a valid OMB Philadelphia, PA You or your authorized agent must sign control number. Books or records You also can fax Form 8233 to: and date Form See Regulations relating to a form or its instructions (267) You are limited section (c) for information must be retained as long as their to 25 pages at one time. about authorized agents. contents may become material in the The exemption from withholding is administration of any Internal Revenue Privacy Act and Paperwork effective for payments made retroactive law. Generally, tax returns and return Reduction Act Notice. We ask for the to the date of the first payment covered information are confidential, as required information on this form to carry out the by Form 8233, even though you must by section Internal Revenue laws of the United wait at least 10 days after you have States. You are not required to request The time needed to complete and properly mailed Form 8233 to the IRS a tax treaty withholding exemption. file this form will vary depending on to see whether the IRS has any However, if you want to receive individual circumstances. The objections to the Form exemption from withholding on estimated average time is: You must not accept Form 8233, compensation for independent (and Recordkeeping, 1 hr. 5 min.; Learning and you must withhold, if either of the certain dependent) personal services, about the law or the form, 31 min.; following applies: you are required to give us this Preparing and sending the form to You know, or have reason to know, information so that we can verify IRS, 57 min. that any of the facts or statements on eligibility under the relevant tax treaty If you have comments concerning Form 8233 may be false, or and confirm proper tax treatment. Our the accuracy of these time estimates or You know, or have reason to know, legal right to ask for this information is suggestions for making this form that the nonresident alien s eligibility for Internal Revenue Code sections 1441, simpler, we would be happy to hear the exemption from withholding cannot 3401, and We need this from you. You can write to the Internal be readily determined (for example, you information to ensure that you are Revenue Service, Tax Products know the nonresident alien has a fixed complying with these laws and to allow Coordinating Committee, base or permanent establishment in the us to figure and collect the right amount SE:W:CAR:MP:T:T:SP, 1111 United States). of tax. Code section 6109 requires Constitution Ave. NW, IR-6526, If you accept Form 8233 and later taxpayers and withholding agents to Washington, DC Do not send find that either of the situations provide their identification number. the tax form to this address. Instead, described above applies, you must Routine uses of this information include give it to your withholding agent. promptly notify the IRS (by writing to giving it to the Department of Justice for the address provided earlier) and you civil and criminal litigation, and cities, must begin withholding on any amounts states, the District of Columbia, and -5-