Tax Treaties

General Information

The University makes various types of payments to nonresident aliens which may be non-taxable for United States and State of Michigan income tax purposes if:

1. There is a tax treaty in effect with their country of residence and
2. Specific articles under the tax treaty grant the exemption.

These various types of payments to nonresident aliens include:

• Salaries paid to teachers/researchers
• Payments for independent services
• Fellowship/Scholarship payments
• Wages paid to students

Income tax withholding rules for salary/wages paid to nonresident aliens require withholding at the graduated tax rates (range of 10% - 35%). Fellowship/scholarship payments to nonresident aliens are taxed at a 14% rate and Independent Contractor payments at a 30% rate.

Upon entry to the U.S., all nonresident aliens must complete an "Alien Certificate" to ensure proper taxation for Federal, Social Security and state taxes. The form can be found at Alien Certificate Form.

Important Tax Treaty Information

The IRS requires a U.S. Identification number for claiming tax treaty benefits. This number may be one of the following:

1. U.S. Social Security Number.
2. Individual Taxpayer Identification number (ITIN).

The IRS will only accept the most recent release of Form 8233. This version of Form 8233 can be identified by "(Rev. March 2009)" in the upper left hand corner.

Forms To Be Used To Claim Tax Treaty Exemption

If a payment can be considered non-taxable under a tax treaty, the recipient of the payment may request that no taxes be withheld by completing the proper document and submitting it to the University Payroll Office, G395 Wolverine Tower, 1279. The document to use for each type of payment is indicated below.

Teaching/Research Wages

• Form 8233
• 8233 Attachment
• Instructions

People Pay

• Form 8233
• B-1, B-2 and Visa Waiver Attachment
• Instructions

Student Wages

• Form 8233
• 8233 Attachment
• Instructions

Fellowship/scholarships

• Form W-8 BEN
• Instructions

A copy of each document is available under the forms/tables tab. The attachment numbers for students and teacher/researchers are in the table further down on the page.

If you have questions, please contact the Payroll Tax Section.