Tax Treaty Benefits
Tax Treaties are bilateral agreements between the U.S. and a number of countries that exempt all or part of your income from U.S. taxation for those temporarily in the U.S. Claiming a treaty allows the individual to pay taxes on the income in their home country instead of the U.S. Eligible individuals can complete treaty forms with Northwestern or claim the treaty when filing their U.S. tax return. It is optional.
Details on treaties is in IRS publication 901 on the IRS website. Most of the tax treaties are for particular types of income, such as student wages or wages for teaching/research and have many limitations on eligibility, amounts, and duration. Northwestern will only grant a tax treaty on income that specifically applies to the treaty and not on miscellaneous payment types such as additional pay, special pay, or temporary wages.
In order to receive tax treaty benefits, you must have tax residence with the treaty country and you must have the applicable tax ID (U.S. Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)). New students & employees will enter their information into the Foreign National Information System (FNIS) and we will analyze your tax treaty eligibility. If you do not have a taxpayer ID, ITIN or SSN, you will not be able to claim tax treaty benefits until you receive your number.
Form 8233 & W-9 tax treaties apply for the calendar year, unless the treaty terms has an earlier expiration and you must renew each year. We will send an email in December to request forms for the following year. If you miss the deadline in January, we will apply your treaty on future income and any retroactive treaty benefits will be claimed on your tax return. W-8BEN treaties are granted for three calendar years including the year we apply the tax treaty.
All income exempt under a tax treaty will be reported on Form 1042-S and mailed no later than March 15th of the following year. Individuals are required to file a U.S. tax return on this income, even if no taxes are withheld.