Instructions For Form 8233 (Page 2 of 4) in pdf

these articles take precedence over the

Line 7. Do not claim that you are

income. No Form W-8BEN is required

“independent personal services” and

exempt from withholding on line 7 of Form

unless a treaty benefit is being claimed.

“dependent personal services” articles of

W-4 (even if you meet both of the

Exception. If you are receiving both

the treaties.

conditions listed on that line).

compensation for personal services

(including compensatory scholarship or

Required Withholding Form

Compensatory Scholarship or

fellowship income) and noncompensatory

Fellowship Income

For compensation you receive for

scholarship or fellowship income from the

independent personal services, complete

In general, scholarship or fellowship

same withholding agent, you may use

Form 8233 to claim a tax treaty

income is compensatory to the extent it

one Form 8233 for both types of income.

withholding exemption for part or all of

represents payment for past, present, or

However, this exception applies only if

that income and/or to claim the daily

future services (for example, teaching,

you are claiming a tax treaty withholding

personal exemption amount.

research, etc.) performed by a

exemption for both types of income.

nonresident alien as an employee and the

Compensation for Dependent

Alternate withholding election. A

performance of those services is a

Personal Services

withholding agent may elect to withhold

condition for receiving the scholarship or

Dependent personal services are services

on the taxable portion of

fellowship (or tuition reduction).

performed as an employee in the United

noncompensatory scholarship or

Example. XYZ University awards a

States by a nonresident alien. Dependent

fellowship income of a nonresident alien

scholarship to N, a nonresident alien

personal services include compensatory

temporarily present in the United States

student. The only condition of the

scholarship or fellowship income (see

under an “F,” “J,” “M,” or “Q” visa as if it

scholarship is that N attends classes and

definition later). Compensation for such

were compensatory scholarship or

maintains a minimum level of academic

services includes wages, salaries, fees,

fellowship income (provided the

performance. The scholarship income is

bonuses, commissions, and similar

nonresident alien is not claiming treaty

not compensatory because N is not

designations for amounts paid to an

benefits with respect to that income). The

required to perform services as an

employee.

withholding agent makes this election by

employee as a condition for receiving the

requesting that the nonresident alien

Required Withholding Form(s)

scholarship.

complete Form W-4 using the instructions

Complete Form 8233 for compensation

in Rev. Proc. 88-24, 1988-1 C.B. 800.

Required Withholding Form(s)

you receive for dependent personal

Indian students should also see Rev.

Compensatory scholarship or fellowship

services only if you are claiming a tax

Proc. 93-20, 1993-1 C.B. 528.

income is considered to be dependent

treaty withholding exemption for part or all

personal services income. Therefore,

Withholding Agent

of that income. Do not use Form 8233 to

complete Form 8233 for this income only

claim the daily personal exemption

Any person, U.S. or foreign, that has

if you are claiming a tax treaty withholding

amount. For compensation for which you

control, receipt, or custody of an amount

exemption for part or all of that income.

are not claiming a tax treaty withholding

subject to withholding or who can

Do not complete Form 8233 to claim the

exemption, use Form W-4, Employee’s

disburse or make payments of an amount

daily personal exemption amount.

Withholding Allowance Certificate.

subject to withholding is a withholding

For any part of this compensatory

agent. The withholding agent may be an

Completing Form W-4. You should

income for which you are not claiming a

individual, corporation, partnership, trust,

complete Form W-4 as follows:

tax treaty withholding exemption, use

association, or any other entity, including

Line 2. You are required to enter a

Form W-4. See Completing Form W-4

(but not limited to) any foreign

social security number (SSN) on line 2 of

earlier.

intermediary, foreign partnership, and

Form W-4. If you do not have an SSN,

U.S. branches of certain foreign banks

Noncompensatory Scholarship

you must apply for one on Form SS-5,

and insurance companies. Generally, the

Application for a Social Security Card.

or Fellowship Income

person who pays (or causes to be paid)

You may get Form SS-5 from a Social

Noncompensatory scholarship or

the amount subject to withholding to the

Security Administration (SSA) office. Fill

fellowship income is scholarship or

nonresident alien individual (or to his or

in Form SS-5 and return it to the SSA.

fellowship income that is not

her agent) must withhold.

compensatory scholarship or fellowship

You cannot enter an individual

Beneficial Owner

income (defined earlier).

taxpayer identification number

For payments other than those for which

(ITIN) on line 2 of Form W-4.

CAUTION

The taxable portion of

a reduced rate of withholding is claimed

noncompensatory scholarship or

Line 3. Check the single box

under an income tax treaty, the beneficial

fellowship income (defined below) paid to

regardless of your actual marital status.

owner of income is generally the person

a nonresident alien is generally subject to

Line 5. You should generally claim

who is required under U.S. tax principles

withholding at a rate of 30% (the rate is

one withholding allowance. However, if

to include the income in gross income on

generally 14% in the case of a

you are a resident of Canada, Mexico, or

a tax return. A person is not a beneficial

nonresident alien temporarily present in

the Republic of (South) Korea; a student

owner of income, however, to the extent

the United States under an “F,” “J,” “M,”

from India; or a U.S. national; you may be

that person is receiving the income as a

or “Q” visa).

able to claim additional withholding

nominee, agent, or custodian, or to the

Taxable portion of noncompensatory

allowances for your spouse and children.

extent the person is a conduit whose

scholarship or fellowship income. If

See Pub. 519 for more information.

participation in a transaction is

you were a degree candidate, the amount

disregarded. In the case of amounts paid

If you are completing Form W-4 for

of this type of income that you used for

that do not constitute income, beneficial

more than one withholding agent (for

expenses other than tuition and

ownership is determined as if the

example, you have more than one

course-related expenses (fees, books,

payment were income.

employer), figure the total number of

supplies, and equipment) is generally

allowances you are entitled to claim (see

taxable. For example, amounts used for

Avoid Common Errors

the previous paragraph) and claim no

room, board, and travel are generally

more than that amount on all Forms W-4

To ensure that your Form 8233 is

taxable. If you were not a degree

combined. Your withholding usually will

promptly accepted, be sure that you:

candidate, the full amount of the

•

be most accurate when all allowances are

Answer all applicable questions

scholarship or fellowship income is

claimed on the Form W-4 for the

completely.

generally taxable.

•

highest-paying job and zero allowances

Specify the tax year for which this form

Required Withholding Form

are claimed on the others.

will be effective in the space provided

Line 6. Write “nonresident alien” or

You should generally complete Form

above Part I of the form.

•

“NRA” above the dotted line on line 6. If

W-8BEN, Certificate of Foreign Status of

Enter your complete name, addresses,

you would like to have an additional

Beneficial Owner for United States Tax

and identifying number(s) in Part I.

•

amount withheld, enter the amount on line

Withholding, to claim a tax treaty

Have attached the required statement

withholding exemption for this type of

described in the line 10 instructions if you

-2-

Instructions For Form 8233 Page 2

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