- An income tax treaty is an agreement between the U. S. and
a foreign country
to minimize
double taxation.
- Certain taxable payments made to
foreign nationals may be exempt from (not
subject to)
U.
S.
tax
based
on
the
terms
of
the
income
tax
treaty
between
the
U.
S.
and
a
foreign
national’s
country
of
tax
residency.
- The United States maintains
income tax treaties with over 60 countries throughout the world.
- No two tax treaties are alike.
- Tax treaty exemptions are typically valid
for a specified number of years and specified annual dollar
amount.
- The existence of an income tax treaty does not guarantee
an exemption from tax withholding.
- Income tax treaties apply to federal tax
but not necessarily
to state tax. The State of Maryland does
not recognize
tax
treaties.
- IRS Publication 901 - U. S. Tax Treaties provides
more extensive information
regarding tax treaties. All IRS publications and tax treaty texts
are
available
on the
IRS website: www.irs.gov.
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