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Can Resident Alien Claim Tax Treaty Benefits - Exception to the Saving Clause - Chinese Student F1, J1 visas?
US Tax Treaty benefits for International Students F1,J1 Visas and other Non Resident Aliens
>> Can Resident Alien Claim Tax Treaty Benefits - Exception to the Saving Clause - Chinese Student F1, J1 visas?
Mostly only Non Resident Aliens can claim Tax Treaty benefits. When a Non Resident, becomes a Resident , a 'Saving Clause' or the right for United States, to tax its Residents as if no Tax Treaty exists kicks in. In short a Resident Alien loses his ability to claim Tax Treaty benefits to reduce taxes.
However there are exceptions when Resident Aliens can continue to claim, Tax Treaty benefits even after they have lost their Non Resident Alien Status for Tax Purposes. This scenario is called ' Exception to the Saving Clause'.
A good example described below, will help you understand ' Exception to the Saving Clause' or how Residents can continue to claim Tax Treaty Benefits:
Example:
Mr.Ling is a Chinese National, enrolled as a student in the United States. He enters United States as a student from 2001 to 2005.
Under Article 20(B) China has a Tax Treaty with United States, where a Chinese Foreign National in US, can continue to claim Tax Treaty benefits for scholarship income, for an unlimited period.
So in this case Mr.Ling claims Tax Treaty benefits on his scholarship income, even after he has lost his Non Resident Status (5 years in F1, J1 visas) and is a Resident in 2006.
We hope you found the article helpful, if you have any questions, please post your question in the Forum or Contact Us.
Mostly only Non Resident Aliens can claim Tax Treaty benefits. When a Non Resident, becomes a Resident , a 'Saving Clause' or the right for United States, to tax its Residents as if no Tax Treaty exists kicks in. In short a Resident Alien loses his ability to claim Tax Treaty benefits to reduce taxes.
However there are exceptions when Resident Aliens can continue to claim, Tax Treaty benefits even after they have lost their Non Resident Alien Status for Tax Purposes. This scenario is called ' Exception to the Saving Clause'.
A good example described below, will help you understand ' Exception to the Saving Clause' or how Residents can continue to claim Tax Treaty Benefits:
Example:
Mr.Ling is a Chinese National, enrolled as a student in the United States. He enters United States as a student from 2001 to 2005.
Under Article 20(B) China has a Tax Treaty with United States, where a Chinese Foreign National in US, can continue to claim Tax Treaty benefits for scholarship income, for an unlimited period.
So in this case Mr.Ling claims Tax Treaty benefits on his scholarship income, even after he has lost his Non Resident Status (5 years in F1, J1 visas) and is a Resident in 2006.
We hope you found the article helpful, if you have any questions, please post your question in the Forum or Contact Us.