[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_column_text el_class=”answer_items”]If a student’s country of residence is  included in the table below and the criteria in Column B and Column C are met, wages qualify for a tax exemption, and the following tax form needs to be completed upon hiring:

Form 8233: Exemption from Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual.

If a student’s country of residence does not appear in the table below, Form 8233 does not need to be completed.

Description of Table Columns

1. Column A: Students’ country of permanent citizenship. This is used in completing Form 8233 line 12c.
2. Column B: Maximum length of exemption. After the maximum number of years in the United States has been reached, the individual is subject to federal tax withholding.EXAMPLE: A student from Romania has $2,000 of student wages but has been in the United States for six years. The $2,000 is subject to taxation because the student has been in the United States over the five-year limit.
3. Column C: Maximum earnings for exemption. The information in Column C is used for completing Form 8233 line 12b. Earnings above the annual maximum per year are subject to taxation. The one exception to this condition is for Canada. Wages below the $10,000 threshold are exempt. However, if wages exceed $10,000, the entire amount is taxable and not just the amount that exceeds $10,000.CANADA EXAMPLE: A student from Canada earns $12,000. Because it exceeds the $10,000 threshold amount, the entire $12,000 is taxable.Note that Table 2 of Publication 901 says that up to $10,000 of dependent personal services compensation paid by a U.S. resident (or foreign resident) to a Canadian resident is excludable under Article XV of the U.S./Canada treaty.

   That might imply that a canadian student  can exclude $10,000 of his $12,000 of wages from income. However, under the explanation on page 4 of Publication 901, if the taxpayer earns more than $10,000 the total amount is taxable. Therefore, the student cannot exclude any income under the treaty.

   OTHER EXAMPLE: A student from China has student wages of $6,000. Because the tax treaty exempts up to $5,000, only $1000 will be subject to federal taxation.

4. Column D: The tax treaty article citation. This is used in completing Form 8233 line 12a.

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