US-China Income Treaty
在美国求学的中国学生可以享受5000$免税，该treaty对于学生身份都是适用的，无论你是按照Resident或者Non-Resident保税。
对于Resident，如果需要Claim Treaty，需要单独填写一份8833，然后在1040中Other Income (21项)中填写See Attached 8833，数额填写-5000
[edit] Form 8833
在8833表格中，填写个人信息，然后check下面两项：
• The taxpayer is disclosing a treaty-based return position as required by section 6114
• Check this box if the taxpayer is a U.S. citizen or resident or is incorporated in the United States
以下对应的是各个表格选项的内容
1.a) P. R. China
1.b) 20(c), paragraph 2 of 4/30/1984 protocol
2. IRC 61:871(b)
3. payor information from your W2
4. N/A
5. Please replace the (content) in the following sentense using your own information and put it in:
(Your Name) is a citizen of the People's Republic of China. He/She entered the US on (date) on an F-1 Visa (student), and has remained in F-1 status continuously since then. Under the residency rules of IRC 7701(b), he/she passed the substantial presence test in (year) and his residency starting date was January 1, (year). This means that for the year (year), he was a resident alien and he can fill form 1040 for (year) as a resident alien.
Article 20(c) of the USA-China income tax treaty allows an annual $5000 exclusion of student wages from gross income. The article contains no time limit, and a Chinese student who qualifies for it may use the article for as long as he is a bona fide student in valid F-1 status, including during that period in which he is engaged in practical training in valid F-1 status. Paragraph (2) of the 04-30-1984 protocol of the USA-China income tax treaty contains the "saving clause" of the treaty, which normally acts to nullify the tax treaty's benefits once a resident of China has become a resident of the USA. However, paragraph (2) of the Protocol also specifies exceptions to the saving clause, among which is article 20 on student and trainees. This means that, even though the taxpayer has become a resident alien under the substantial presence test of IRC 7701(b), he may still claim the benefit of article 20 of the USA-China income treaty.
(Name) has elected to do this and is claiming an exclusion from gross income for (year) of $5000 in wages as allowed by article 20(c) of the USA-China income treaty.
U.S. Residency Under Tax Treaty “Tie-Breaker” Rule
In certain circumstances, individuals who are treated as residents of the United States under an income tax treaty (after application of the so-called “tie-breaker” rule) will be entitled to treaty benefits. (The “tie-breaker” rule is explained in chapter 1 under Effect of Tax Treaties.) If this applies to you, you generally will not need to file a Form 8833 for the income for which treaty benefits are claimed. This is because the income will typically be of a category for which disclosure on a Form 8833 is waived. See Exceptions, later, under Reporting Treaty Benefits Claimed.
In most cases, you also will not need to report the income on your Form 1040 because the income will be exempt from U.S. tax under the treaty. However, if the income has been reported as taxable income on a Form W-2, Form 1042-S, Form 1099, or other information return, you should report it on the appropriate line of Form 1040 (for example, line 7 in the case of wages or salaries). Enter the amount for which treaty benefits are claimed in parentheses on Form 1040, line 21. Next to the amount write “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption. On Form 1040, subtract this amount from your income to arrive at total income on Form 1040, line 22.
Format: ($5,000) Exempt income People’s Republic of China Article 20(c)
Also follow the above procedure for income that is subject to a reduced rate of tax, instead of an exemption, under the treaty. Attach a statement to Form 1040 showing a computation of the tax at the reduced rate, the name of the treaty country, and the treaty article that provides for the reduced tax rate. Include this tax on Form 1040, line 63. On the dotted line next to line 63, write “Tax from attached statement” and the amount of the tax.
Example.Mr. Yu, a citizen of the People's Republic of China, entered the United States as a nonresident alien student on January 1, 2002. He remained a nonresident alien through 2006 and was able to exclude his scholarship from U.S. tax in those years under Article 20 of the U.S.-People's Republic of China income tax treaty. On January 1, 2007, he became a resident alien under the substantial presence test because his stay in the United States exceeded 5 years. Even though Mr. Yu is now a resident alien, the provisions of Article 20 still apply because of the exception to the saving clause in paragraph 2 of the Protocol to the U.S.-People's Republic of China treaty dated April 30, 1984. Mr. Yu should submit Form W-9 and the required statement to the payor.
在美国求学的中国学生可以享受5000$免税，该treaty对于学生身份都是适用的，无论你是按照Resident或者Non-Resident保税。
对于Resident，如果需要Claim Treaty，需要单独填写一份8833，然后在1040中Other Income (21项)中填写See Attached 8833，数额填写-5000
[edit] Form 8833
在8833表格中，填写个人信息，然后check下面两项：
• The taxpayer is disclosing a treaty-based return position as required by section 6114
• Check this box if the taxpayer is a U.S. citizen or resident or is incorporated in the United States
以下对应的是各个表格选项的内容
1.a) P. R. China
1.b) 20(c), paragraph 2 of 4/30/1984 protocol
2. IRC 61:871(b)
3. payor information from your W2
4. N/A
5. Please replace the (content) in the following sentense using your own information and put it in:
(Your Name) is a citizen of the People's Republic of China. He/She entered the US on (date) on an F-1 Visa (student), and has remained in F-1 status continuously since then. Under the residency rules of IRC 7701(b), he/she passed the substantial presence test in (year) and his residency starting date was January 1, (year). This means that for the year (year), he was a resident alien and he can fill form 1040 for (year) as a resident alien.
Article 20(c) of the USA-China income tax treaty allows an annual $5000 exclusion of student wages from gross income. The article contains no time limit, and a Chinese student who qualifies for it may use the article for as long as he is a bona fide student in valid F-1 status, including during that period in which he is engaged in practical training in valid F-1 status. Paragraph (2) of the 04-30-1984 protocol of the USA-China income tax treaty contains the "saving clause" of the treaty, which normally acts to nullify the tax treaty's benefits once a resident of China has become a resident of the USA. However, paragraph (2) of the Protocol also specifies exceptions to the saving clause, among which is article 20 on student and trainees. This means that, even though the taxpayer has become a resident alien under the substantial presence test of IRC 7701(b), he may still claim the benefit of article 20 of the USA-China income treaty.
(Name) has elected to do this and is claiming an exclusion from gross income for (year) of $5000 in wages as allowed by article 20(c) of the USA-China income treaty.
U.S. Residency Under Tax Treaty “Tie-Breaker” Rule
In certain circumstances, individuals who are treated as residents of the United States under an income tax treaty (after application of the so-called “tie-breaker” rule) will be entitled to treaty benefits. (The “tie-breaker” rule is explained in chapter 1 under Effect of Tax Treaties.) If this applies to you, you generally will not need to file a Form 8833 for the income for which treaty benefits are claimed. This is because the income will typically be of a category for which disclosure on a Form 8833 is waived. See Exceptions, later, under Reporting Treaty Benefits Claimed.
In most cases, you also will not need to report the income on your Form 1040 because the income will be exempt from U.S. tax under the treaty. However, if the income has been reported as taxable income on a Form W-2, Form 1042-S, Form 1099, or other information return, you should report it on the appropriate line of Form 1040 (for example, line 7 in the case of wages or salaries). Enter the amount for which treaty benefits are claimed in parentheses on Form 1040, line 21. Next to the amount write “Exempt income,” the name of the treaty country, and the treaty article that provides the exemption. On Form 1040, subtract this amount from your income to arrive at total income on Form 1040, line 22.
Format: ($5,000) Exempt income People’s Republic of China Article 20(c)
Also follow the above procedure for income that is subject to a reduced rate of tax, instead of an exemption, under the treaty. Attach a statement to Form 1040 showing a computation of the tax at the reduced rate, the name of the treaty country, and the treaty article that provides for the reduced tax rate. Include this tax on Form 1040, line 63. On the dotted line next to line 63, write “Tax from attached statement” and the amount of the tax.
Example.Mr. Yu, a citizen of the People's Republic of China, entered the United States as a nonresident alien student on January 1, 2002. He remained a nonresident alien through 2006 and was able to exclude his scholarship from U.S. tax in those years under Article 20 of the U.S.-People's Republic of China income tax treaty. On January 1, 2007, he became a resident alien under the substantial presence test because his stay in the United States exceeded 5 years. Even though Mr. Yu is now a resident alien, the provisions of Article 20 still apply because of the exception to the saving clause in paragraph 2 of the Protocol to the U.S.-People's Republic of China treaty dated April 30, 1984. Mr. Yu should submit Form W-9 and the required statement to the payor.
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