International Tax Treaty Information

Employees who are classified as non-resident aliens may be eligible to claim exemption from U.S. income tax withholding under an income tax treaty between the U.S. and the country of which the non-resident alien employee is a resident.

• Please note: Purdue will no longer be able to recognize income tax treaties with countries that have specific restrictions that could disqualify the benefits of the treaty. These restrictions might include:
  • The person’s income exceeding the treaty dollar limit.
  • The person’s presence in the U.S. exceeding the time limit set by the treaty.
  • Other factors such as changes in visa or immigration status, differences in country of citizenship and residence, or potential employment from another sponsor during the calendar year that may affect income limits.

Based on the conditions outlined above, Purdue will not recognize the following countries: United Kingdom, Netherlands, India and Canada.

Non-resident alien employees who do not qualify for treaty-exemption are subject to U.S. income tax withholding. These employees are required to claim "single" marital status and no additional credit or deductions, regardless of marital status.

For those who submitted a tax treaty to Purdue:

• You must report all income exempt from US tax under a treaty (regardless of amount). Failure to report the treaty (will be reported on a 1042-S form) on your return may result in the IRS not accepting the treaty that Purdue allowed. The IRS is the final approver of any treaty, and the US Federal and state tax filings complete the process.
  
  
• The income tax treaty is only applicable to Federal, state and local tax withholding, not the payroll (Social Security and Medicare) FICA taxes.
  
  
• Purdue can only enter an income tax treaty from the day the forms are signed and dated. Any previous wages that could have been exempt from tax can be listed on your tax return filed for that tax year.

If you did not submit a tax treaty during the year, you may still be able to claim a tax treaty on your federal and state income tax returns. Please see the IRS information for help with listing an income tax treaty on your annual tax return.

Resources

• Claiming tax treaty benefits (IRS.gov)
• General information for international taxpayers (IRS)

Any questions can be directed to tax@purdue.edu.