Form 8833 - Treaty-Based Return Position Disclosure

What is Form 8833

The United States has tax treaties with a number of foreign countries.

Under these treaties, residents (not necessarily citizens) of foreign countries are taxed at a reduced rate, or are exempt from U.S. taxes on certain items of income they receive from sources within the United States.

Using form 8833 and claiming tax treaty benefits

You can claim treaty benefits that override or modify any provision of domestic U.S. tax law - if by claiming these benefits you reduce the tax due, you must attach form 8833, Treaty-Based Return Position to your tax return.

When to complete form 8833

You must file form 8833 if you claim the following treaty benefits:

1. A reduction or modification in the taxation of gain or loss from the disposition of a U.S. real property interest based on a treaty.

2. A change to the source of an item of income or a deduction based on a treaty.

3. A credit for a specific foreign tax for which foreign tax credit would not be allowed by the Internal Revenue Code.

You must also file Form 8833 if you receive payments or income items totaling more than $100,000 and you determine your country of residence under a treaty and not under the rules for determining alien tax status.

EXCEPTIONS TO FORM 8833

You do not have to file form 8833 if you have any of the 5 circumstances:

1. You claim a reduced rate of withholding tax under a treaty on interest, dividends, rent, royalties, or other fixed or determinable annual or periodic income ordinarily subject to the 30% rate.

2. You claim a treaty exemption that reduces or modifies the taxation of income from dependent personal services, pensions, annuities, social security and other public pensions, or income of artists, athletes, students, trainees, or teachers. This includes taxable scholarship and fellowship grants.

3. You claim a reduction or modification of taxation of income under an International Social Security Agreement or a Diplomatic or Consular Agreement.

4. You are a partner in a partnership or a beneficiary of an estate or trust and the partnership, estate, or trust reports the required information on its return

5. The payments or items of income that are otherwise required to be disclosed total no more than $10,000

When To File

While you are living outside the United States as an expat, the filing deadline for the US tax return is June 15 each year (extended to July 15 for 2020).

Form 8833 is filed with your main federal tax return with the IRS.

Next Steps

If you do need to file to claim the benefits of a tax treaty, or you have any questions about treaties for countries and specific items of income, feel free to contact one of our U.S. expat accountants and tax preparershere.