Tax Treaties and You
Many countries have negotiated a tax treaty with the United States. The treaty is an agreement between the two countries about a list of actions that both countries have agreed to respect. Frequently, among these agreements are statements limiting the amount of income that will not be taxed or specifying the tax rate that will be applied.
Income earned is not the only type of revenue that is subject to being taxed. Other types of taxable income include non-tuition scholarships which cover living expenses, awards, prizes, honoraria, lottery winnings and so forth.
All visitors should assume that all their income will be subject to tax unless the visitor completes the necessary forms that provide the university tax department with documentation that justifies not withholding income taxes. The usual reason is that a treaty exempts all or part of income earned during a tax year. Without such documentation, the university would be subject to significant penalties.
Note: treaties apply to countries of residence. They do not apply to countries where a person was born or where citizenship exists. The IRS generally defines a country of residence as the the country where a person lived for the one full year immediately preceding the date of first entrance into the US for the purpose for which the person entered. Another way of understanding this is to say the country of residence is where you lived for 365 days prior to your first entry under one of these visa types: F, J, M, Q.
Tax exemptions are not automatic and must be applied for annually. International visitors can apply for tax treaty exemption at the Notre Dame Tax Department (732 Grace Hall, 574-631-7051).
A fast way for international visitors to determine whether a tax treaty exists for a country of residence is to scan the IRS web site. On this web page scroll to the bottom and use the information under References and Links, especially publication 901. If the country of residence is listed there, then the treaty can be read.
At Notre Dame the responsibility for determining treaty applicability rests with the Tax Department in the Controller's Office. It does not rest with the TAP.
All persons seeking treaty income exemptions and answers to other treaty-related questions should email the Assistant Tax Director, Mrs. Becky Laskowski, to request an appointment.
For current information regarding the social security number application process, please email the Notre Dame Immigration Services Office for information.