Tax Facts

Tax Treaties

The United States has tax treaties with over 40 different countries.  Under the provisions of these treaties, citizens and resident aliens who are subject to taxes imposed by the foreign countries are entitled to certain credits, deductions, exemptions and reductions in the rate of taxes of those foreign countries.

What Are The Benefits?

The benefits depend on each person's specific situation and on the exact text of the Tax Treaty.  Be sure you talk to a tax professional - such as an Enrolled Agent - to help you understand exactly what the tax treaty provisions are and how they apply to your particular circumstances.  For example, there may be tax benefits to investment income, such as interest and dividends, that you receive from sources in a treaty country.  Several treaties provide exemption for capital gains if certain requirements are met.

Professors and Teachers

Many of the benefits are afforded to professors, teachers and research scientists.  But just as often, the tax treaties benefit students and trainees, especially those students in the STEM (science, technology, engineering and math) specialties.  Income you receive ffrom the U.S. for study, research or business, professional and technical training (Optional Practical Training, or OPT) may be exempt from a treaty country's income tax.  Some treaties even exempt grants, allowances, and awards received from governmental and certain nonprofit organizations.

India

In general, non-resident aliens may not claim a standard deduction.  However, if you are a citizen of India and are in the United States as a student, you may qualify to claim the standard deduction because of the US-India Tax Treaty.  And, as well, Indian students who are married may claim a spouse exemption if the spouse is living with the student in the United States and if the spouse had no earned income.

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