What is a tax treaty, and how does it apply with respect to wages paid to NRAs?
A tax treaty is an agreement entered into between governments under which each country agrees to limit or modify the application of its domestic tax laws in an attempt to avoid double taxation of income – that is, having the same income taxed by both countries. Tax treaties vary, but they generally limit or exempt U.S. taxation of compensation made to residents of the foreign country. Some tax treaties are limited to an amount of time per year, and/or a limited dollar amount per year. Wages earned beyond either limit are subject to federal income tax. Tax Treaties apply to Federal taxes only; you are still required to follow State tax requirements. See IRS Publication 901 “US Tax Treaties” at the IRS web site for more information.
A tax treaty is an agreement entered into between governments under which each country agrees to limit or modify the application of its domestic tax laws in an attempt to avoid double taxation of income – that is, having the same income taxed by both countries. Tax treaties vary, but they generally limit or exempt U.S. taxation of compensation made to residents of the foreign country. Some tax treaties are limited to an amount of time per year, and/or a limited dollar amount per year. Wages earned beyond either limit are subject to federal income tax withholding. See IRS Publication 901 U.S. Tax Treaties for additional information.
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- What is a tax treaty, and how does it apply with respect to wages paid to NRAs?
- What is a tax treaty, and how does it apply with respect to payments to NRAs?
