Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual

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Instructions for Form 8233

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Instructions for Form 8233

Department of the Treasury
Internal Revenue Service

(Rev. December 2005)
Exemption From Withholding on Compensation for Independent (and Certain
Dependent) Personal Services of a Nonresident Alien Individual

General Instructions
Section references are to the Internal
Revenue Code unless otherwise noted.
If you are a “resident of a treaty
country,” you must know the terms
CAUTION of the tax treaty between the
United States and the treaty country to
properly complete Form 8233.

!

Purpose of Form
In general, section 1441 requires 30%
federal income tax withholding on
compensation for independent personal
services (defined on this page). Sections
1441, 3401, and 3402 require
withholding, sometimes at 30% and
sometimes at graduated rates, on
compensation for dependent personal
services (defined beginning on this page).
However, some payments may be
exempt from withholding because of a tax
treaty or the personal exemption amount.
Complete and give Form 8233 to your
withholding agent if some or all of your
compensation is exempt from withholding.
You can use Form 8233 to claim a tax
treaty withholding exemption for
noncompensatory scholarship or
fellowship income only if you are also
claiming a tax treaty withholding
exemption for compensation for personal
services (including compensatory
scholarship or fellowship income)
received from the same withholding
agent.
Do not use Form 8233 if you have
an office in the United States
CAUTION regularly available to you for
performing personal services.
Additional information. You can get the
complete text of most U.S. tax treaties
from the IRS website at www.irs.gov.
Technical explanations for many of those
treaties are also available at that site.
Also, see Pub. 901, U.S. Tax Treaties, for
a quick reference guide to the provisions
of U.S. tax treaties. You can get any of
the forms or publications referred to in
these instructions by calling
1-800-TAX-FORM (1-800-829-3676) or
by downloading them from the website.

!

Giving Form 8233 to the
Withholding Agent
You must complete Form 8233:
• For each tax year (be sure to specify
the tax year in the space provided above
Part I of the form),
• For each withholding agent, and
• For each type of income. However, you
may use one Form 8233 to claim a tax
treaty withholding exemption for both
compensation for personal services
(including compensatory scholarship or

fellowship income) and noncompensatory
scholarship or fellowship income received
from the same withholding agent.
Example. A nonresident alien is
primarily present in the United States as a
professor, but also is occasionally invited
to lecture at another educational
institution. These lectures are not
connected with his teaching obligations
but are in the nature of self-employment.
For each tax year, the professor must
complete two Forms 8233 and give one to
each withholding agent to claim tax treaty
benefits on the separate items of income.

Definitions
Nonresident Alien
If you are an alien individual (that is, an
individual who is not a U.S. citizen),
specific rules apply to determine if you
are a resident alien or a nonresident alien
for tax purposes. Generally, you are a
resident alien if you meet either the
“green card test” or the “substantial
presence test” for the calendar year. Any
person not meeting either test is generally
a nonresident alien. Additionally, an alien
individual who qualifies as a “resident of a
treaty country” (defined later) or a bona
fide resident of Puerto Rico, Guam, the
Commonwealth of the Northern Mariana
Islands, the U.S. Virgin Islands, or
American Samoa is a nonresident alien
individual.
For more information on the tests used
to determine resident alien or nonresident
alien status, see Pub. 519, U.S. Tax
Guide for Aliens.
Note. Even though a nonresident alien
individual married to a U.S. citizen or
resident alien may choose to be treated
as a resident alien for certain purposes
(for example, filing a joint income tax
return), such individual is still treated as a
nonresident alien for withholding tax
purposes on all income except wages.

U.S. Person
For purposes of this form, a U.S. person
is a U.S. citizen or resident alien.

Tax Treaty Withholding
Exemption
This term refers to an exemption from
withholding permitted by IRS regulations
under section 1441 that is based on a tax
treaty benefit. See Resident of a Treaty
Country next for requirements for claiming
a tax treaty benefit on this form.
See the instructions for line 4 on page
3 for additional information for
determining residence for purposes of
claiming a tax treaty withholding
exemption on this form.
Cat. No. 22663B

Resident of a Treaty Country
An alien individual may claim to be a
resident of a treaty country if he or she
qualifies as a resident of that country
under the terms of the residency article of
the tax treaty between the United States
and that country. See Nonresident Alien
earlier.
A nonresident alien may claim a tax
treaty benefit on this form only if that
individual is the beneficial owner of the
income and meets the residency
requirement and all other requirements
for benefits under the terms of the tax
treaty.

Compensation for Independent
Personal Services
Independent personal services are
services performed as an independent
contractor in the United States by a
nonresident alien who is self-employed
rather than an employee. Compensation
for such services includes payments for
contract labor; payments for professional
services, such as fees to an attorney,
physician, or accountant, if the payments
are made directly to the person
performing the services; consulting fees;
honoraria paid to visiting professors,
teachers, researchers, scientists, and
prominent speakers; and generally,
payments for performances by public
entertainers.
Public entertainers. Special restrictions
on exemption from or reduction of
withholding apply to nonresident alien
public entertainers (such as actors,
musicians, artists, and athletes).
Generally, such individuals are subject to
30% withholding from gross income paid
for personal services performed unless a
reduced rate of withholding under a
withholding agreement prepared in
accordance with Rev. Proc. 89-47,
1989-2 C.B. 598, has been approved by
the IRS. In addition, many tax treaties
contain separate articles that apply to
public entertainers. If present, these
articles take precedence over the
“independent personal services” and
“dependent personal services” articles of
the treaties.

Required Withholding Form
For compensation you receive for
independent personal services, complete
Form 8233 to claim a tax treaty
withholding exemption for part or all of
that income and/or to claim the daily
personal exemption amount.

Compensation for Dependent
Personal Services
Dependent personal services are services
performed as an employee in the United
States by a nonresident alien. Dependent

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Instructions for Form 8233

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personal services include compensatory
scholarship or fellowship income (see
definition later). Compensation for such
services includes wages, salaries, fees,
bonuses, commissions, and similar
designations for amounts paid to an
employee.

Required Withholding Form(s)
Complete Form 8233 for compensation
you receive for dependent personal
services only if you are claiming a tax
treaty withholding exemption for part or all
of that income. Do not use Form 8233 to
claim the daily personal exemption
amount. For compensation for which you
are not claiming a tax treaty withholding
exemption, use Form W-4, Employee’s
Withholding Allowance Certificate.
Completing Form W-4. You should
complete Form W-4 as follows:
Line 2. You are required to enter a
social security number (SSN) on line 2 of
Form W-4. If you do not have an SSN,
you must apply for one on Form SS-5,
Application for a Social Security Card.
You may get Form SS-5 from a Social
Security Administration (SSA) Office. Fill
in Form SS-5 and return it to the SSA.

!

CAUTION

You cannot enter an individual
taxpayer identification number
(ITIN) on line 2 of Form W-4.

Line 3. Check the single box
regardless of your actual marital status.
Line 5. You should generally claim
one withholding allowance. However, if
you are a resident of Canada, Mexico, or
the Republic of (South) Korea; a student
from India; or a U.S. national; you may be
able to claim additional withholding
allowances for your spouse and children.
See Pub. 519 for more information.
If you are completing Form W-4 for
more than one withholding agent (for
example, you have more than one
employer), figure the total number of
allowances you are entitled to claim (see
the previous paragraph) and claim no
more than that amount on all Forms W-4
combined. Your withholding usually will
be most accurate when all allowances are
claimed on the Form W-4 for the
highest-paying job and zero allowances
are claimed on the others.
Line 6. Write “nonresident alien” or
“NRA” above the dotted line on line 6. If
you would like to have an additional
amount withheld, enter the amount on line
6.
Line 7. Do not claim that you are
exempt from withholding on line 7 of Form
W-4 (even if you meet both of the
conditions listed on that line).

Compensatory Scholarship or
Fellowship Income
In general, scholarship or fellowship
income is compensatory to the extent it
represents payment for past, present, or
future services (for example, teaching,
research, etc.) performed by a
nonresident alien as an employee and the
performance of those services is a
condition for receiving the scholarship or
fellowship (or tuition reduction).

Example. XYZ University awards a
scholarship to N, a nonresident alien
student. The only condition of the
scholarship is that N attends classes and
maintains a minimum level of academic
performance. The scholarship income is
not compensatory because N is not
required to perform services as an
employee as a condition for receiving the
scholarship.

Required Withholding Form(s)
Compensatory scholarship or fellowship
income is considered to be dependent
personal services income. Therefore,
complete Form 8233 for this income only
if you are claiming a tax treaty withholding
exemption for part or all of that income.
Do not complete Form 8233 to claim the
daily personal exemption amount.
For any part of this compensatory
income for which you are not claiming a
tax treaty withholding exemption, use
Form W-4. See Completing Form W-4
earlier.

Noncompensatory Scholarship
or Fellowship Income
Noncompensatory scholarship or
fellowship income is scholarship or
fellowship income that is not
compensatory scholarship or fellowship
income (defined earlier).
The taxable portion of
noncompensatory scholarship or
fellowship income (defined below) paid to
a nonresident alien is generally subject to
withholding at a rate of 30% (the rate is
generally 14% in the case of a
nonresident alien temporarily present in
the United States under an “F,” “J,” “M,”
or “Q” visa).
Taxable portion of noncompensatory
scholarship or fellowship income. If
you were a degree candidate, the amount
of this type of income that you used for
expenses other than tuition and
course-related expenses (fees, books,
supplies, and equipment) is generally
taxable. For example, amounts used for
room, board, and travel are generally
taxable. If you were not a degree
candidate, the full amount of the
scholarship or fellowship income is
generally taxable.

Required Withholding Form
You should generally complete Form
W-8BEN, Certificate of Foreign Status of
Beneficial Owner for United States Tax
Withholding, to claim a tax treaty
withholding exemption for this type of
income. No Form W-8BEN is required
unless a treaty benefit is being claimed.
Exception. If you are receiving both
compensation for personal services
(including compensatory scholarship or
fellowship income) and noncompensatory
scholarship or fellowship income from the
same withholding agent, you may use
one Form 8233 for both types of income.
However, this exception applies only if
you are claiming a tax treaty withholding
exemption for both types of income.
Alternate withholding election. A
withholding agent may elect to withhold
on the taxable portion of
noncompensatory scholarship or

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fellowship income of a nonresident alien
temporarily present in the United States
under an “F,” “J,” “M,” or “Q” visa as if it
were compensatory scholarship or
fellowship income (provided the
nonresident alien is not claiming treaty
benefits with respect to that income). The
withholding agent makes this election by
requesting that the nonresident alien
complete Form W-4 using the instructions
in Rev. Proc. 88-24, 1988-1 C.B. 800.

Withholding Agent
Any person, U.S. or foreign, that has
control, receipt, or custody of an amount
subject to withholding or who can
disburse or make payments of an amount
subject to withholding is a withholding
agent. The withholding agent may be an
individual, corporation, partnership, trust,
association, or any other entity, including
(but not limited to) any foreign
intermediary, foreign partnership, and
U.S. branches of certain foreign banks
and insurance companies. Generally, the
person who pays (or causes to be paid)
the amount subject to withholding to the
nonresident alien individual (or to his or
her agent) must withhold.

Beneficial Owner
For payments other than those for which
a reduced rate of withholding is claimed
under an income tax treaty, the beneficial
owner of income is generally the person
who is required under U.S. tax principles
to include the income in gross income on
a tax return. A person is not a beneficial
owner of income, however, to the extent
that person is receiving the income as a
nominee, agent, or custodian, or to the
extent the person is a conduit whose
participation in a transaction is
disregarded. In the case of amounts paid
that do not constitute income, beneficial
ownership is determined as if the
payment were income.

Avoid Common Errors
To ensure that your Form 8233 is
promptly accepted, be sure that you:
• Answer all applicable questions
completely.
• Specify the tax year for which this form
will be effective in the space provided
above Part I of the form.
• Enter your complete name, addresses,
and identifying number(s) in Part I.
• Have attached the required statement
described in the line 10 instructions if you
are a foreign student, trainee, professor/
teacher, or researcher.
• Are not trying to claim tax treaty
benefits for a country with which the
United States does not have a ratified tax
treaty.
• Are not trying to claim tax treaty
benefits that do not exist in your treaty.
• Complete lines 11 through 14 in
sufficient detail to allow the IRS to
determine the tax treaty benefit you are
claiming.
• Claim the proper number of personal
exemptions on line 15.
• Complete the required certification in
Part III.

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Instructions for Form 8233

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Specific Instructions
Part I
Line 2
You are required to furnish a U.S.
taxpayer identifying number on this form.
You are generally required to enter your
social security number (SSN) on line 2.
To apply for an SSN, get Form SS-5 from
a Social Security Administration (SSA)
office. Fill in Form SS-5 and return it to
the SSA.
If you do not have an SSN and are not
eligible to get one, you must get an
individual taxpayer identification number
(ITIN). To apply for an ITIN, file Form
W-7, Application for IRS Individual
Taxpayer Identification Number, with the
IRS. Generally, you apply for an ITIN
when you file your tax return for which the
ITIN is needed. However, if the reason for
your ITIN request is because you need to
provide Form 8233 to the withholding
agent, you must file Form W-7 and
provide proof that you are not eligible for
an SSN (your Form SS-5 was rejected by
the SSA) and include a Form 8233. It
usually takes about 4-6 weeks to get an
ITIN. For more information on requesting
an ITIN, see the Form W-7 instructions.
If you have applied for a U.S. taxpayer
identifying number but have not yet
received it, you may attach a copy of a
completed Form W-7 or SS-5 showing
that a number has been applied for.
An ITIN is for tax use only. It does
not entitle you to social security
CAUTION benefits or change your
employment or immigration status under
U.S. law.

!

Line 3
If your country of residence for tax
purposes has issued you a tax identifying
number, enter it here. For example, if you
are a resident of Canada, enter your
Social Insurance Number.

Line 4
Your permanent residence address is the
address in the country where you claim to
be a resident for purposes of that
country’s income tax. If you are
completing Form 8233 to claim a tax
treaty withholding exemption, you must
determine your residency in the manner
required by the treaty. Do not show the
address of a financial institution, a post
office box, or an address used solely for
mailing purposes. If you are an individual
who does not have a tax residence in any
country, your permanent residence is
where you normally reside.
Most tax treaties that provide for a tax
treaty withholding exemption require that
the recipient be a resident of the treaty
country at the time of, or immediately
prior to, entry into the United States.
Thus, a student or researcher may
generally claim the withholding exemption
even if he or she no longer has a
permanent address in the treaty country
after entry into the United States. If this is
the case, you may provide a U.S. address
on line 4 and still be eligible for the

withholding exemption if all other
conditions required by the tax treaty are
met. You must also identify on line 12a
and/or line 13b the tax treaty country of
which you were a resident at the time of,
or immediately prior to, your entry into the
United States.

Line 6
Enter your U.S. visa type. For example,
foreign students are usually granted an
“F-1” visa. Foreign professors, teachers,
or researchers are usually granted a “J-1”
visa. Business/vocational trainees are
usually granted an “M-1” visa; however,
some persons granted a “J-1” visa may
also be considered business/vocational
trainees (for example, a person admitted
to complete a postgraduate residency in
medicine).
If you do not have, or do not require, a
visa, write “None.”
Spouses and dependents
admitted on secondary visas (for
CAUTION example, “F-2,” “J-2,” “H-4,” and
“O-3” visas) are not usually eligible to
claim the same treaty benefits as the
primary visa holder.

!

Line 8
You are generally required to enter your
date of entry into the United States that
pertains to your current nonimmigrant
status. For example, enter the date of
arrival shown on your current Immigration
Form I-94, Arrival-Departure Record.
Exception. If you are claiming a tax
treaty benefit that is determined by
reference to more than one date of
arrival, enter the earlier date of arrival.
For example, you are currently claiming
treaty benefits (as a teacher or a
researcher) under article 15 of the tax
treaty between the United States and
Norway. You previously claimed treaty
benefits (as a student) under article 16(1)
of that treaty. Under article 16(4) of that
treaty, the combination of exemptions
under articles 15 and 16(1) may not
extend beyond 5 tax years from the date
you entered the United States. If article
16(4) of that treaty applies, enter on line 8
the date you entered the United States as
a student.

Line 9a
Enter your current nonimmigrant status.
For example, enter your current
nonimmigrant status shown on your
current Immigration Form I-94.

Line 9b
Enter the date your current nonimmigrant
status expires. For example, you may
enter the date of expiration shown on
your current Immigration Form I-94. Enter
“DS” on line 9b if the date of expiration is
based on “duration of status.”

Line 10
Nonresident alien students, trainees,
professors/teachers, and researchers
using Form 8233 to claim a tax treaty
withholding exemption for compensation
for personal services must attach to Form
8233 a statement. The format and
contents of the required statements are
shown in Appendix A and Appendix B in
Pub. 519.

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Part II
Line 11a
For compensation for independent
personal services, examples of
acceptable descriptions to enter on this
line include: “Consulting contract to
design software” or “give three lectures at
XYZ University.”
For compensation for dependent
personal services, examples of
acceptable descriptions to enter on this
line include:
• A nonresident alien student may enter
“part-time library assistant,” “part-time
restaurant worker,” or “teaching one
chemistry course per semester to
undergraduate students.”
• A nonresident alien professor or
teacher may enter “teaching at ABC
University.”
• A nonresident alien researcher may
enter “research at ABC University’s
school for liquid crystal research.”
• A nonresident alien business/vocational
trainee may enter “neurosurgical
residency at ABC Hospital” or “one-year
internship in hydraulic engineering at XYZ
Corporation.”

Line 11b
Enter the total amount of compensation
for personal services you will receive from
this withholding agent during the tax year.
Enter an estimated amount if you do not
know the exact amount.

Line 12a
Enter the specific treaty and article on
which you are basing your claim for
exemption from withholding (for example,
“U.S./Germany tax treaty, Article 20(4)”).

Line 12b
If all income received for the services
performed to which this Form 8233
applies is exempt, write “All.” If only part
is exempt, enter the exact dollar amount
that is exempt from withholding.

Line 12c
Generally, you may claim a withholding
exemption based on a U.S. tax treaty with
the country in which you claim permanent
(or indefinite) residence. This is the
foreign country in which you live most of
the time. It is not necessarily the country
of your citizenship. For example, you are
a citizen of Pakistan but maintain your
home in England. You cannot claim a
withholding exemption based on the U.S./
Pakistan tax treaty. Any withholding
exemption you claim must be based on
the U.S./United Kingdom tax treaty.

Line 13b
Enter the specific treaty and article on
which you are basing your claim for
exemption from withholding (for example,
“U.S./Germany tax treaty, Article 20(3)”).

Line 14
Provide sufficient facts to justify the
exemption from withholding claimed on
line 12 and/or line 13. Be sure you
provide enough details to allow the IRS to
determine the tax treaty benefit you are
claiming.

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Instructions for Form 8233

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Lines 15 through 18 (for certain
independent personal services)
Do not complete lines 15 through 18 if
you are claiming on line 12b that all of the
compensation you are receiving for
independent personal services is exempt
from withholding.

Line 15
For compensation for independent
personal services for which an exemption
from withholding is not available, 30%
must be withheld from that compensation
after subtracting the value of one
personal exemption. You will generally
enter “1” on line 15; however, if the
exception below applies to you, enter the
total number of personal exemptions you
are entitled to on line 15.
Exception. If you are a resident of
Canada, Mexico, or the Republic of
(South) Korea; a student from India; or a
U.S. national; you may be able to claim
additional personal exemptions for your
spouse and children. For 2005, the new
US-Japan treaty does not allow a
deduction for additional personal
exemptions unless you choose to have
the old treaty apply in 2005. See Pub. 519
for more information.

Lines 16 and 17
Each allowable personal exemption must
be prorated for the number of days during
the tax year you will perform the personal
services in the United States. Enter the
number of days on line 16 that pertain to
the independent personal services
described in line 11a. To figure the daily
personal exemption amount to enter on
line 17, divide the personal exemption
amount for the tax year ($3,200 for 2005)
by 365 (366 for a leap year) and multiply
the result by the amount you entered on
line 15. For example, if you are entitled to
one personal exemption for 2005, enter
$8.77 (that is, $3,200 / 365 days = $8.77
x 1 personal exemption = $8.77) on line
17.

Part IV
Withholding Agent’s
Responsibilities
When the nonresident alien individual
gives you Form 8233, review it to see if
you are satisfied that the exemption from
withholding is warranted. If you are

satisfied, based on the facts presented,
complete and sign the certification in Part
IV.
You will need three copies of a
completed Form 8233. Within 5 days of
your acceptance, forward one copy to:
Internal Revenue Service
International Section
P.O. Box 920
Bensalem, PA 19020-8518
Give one copy of the completed Form
8233 to the nonresident alien individual.
Keep a copy for your records. Each copy
of Form 8233 must include any
attachments submitted by the nonresident
alien individual.
The exemption from withholding is
effective for payments made retroactive to
the date of the first payment covered by
Form 8233, even though you must wait at
least 10 days after you have properly
mailed Form 8233 to the IRS to see
whether the IRS has any objections to the
Form 8233.
You must not accept Form 8233, and
you must withhold, if either of the
following applies:
• You know, or have reason to know, that
any of the facts or statements on Form
8233 may be false or
• You know, or have reason to know, that
the nonresident alien’s eligibility for the
exemption from withholding cannot be
readily determined (for example, you
know the nonresident alien has a fixed
base or permanent establishment in the
United States).
If you accept Form 8233 and later find
that either of the situations described
above applies, you must promptly notify
the IRS (by writing to the above address)
and you must begin withholding on any
amounts not yet paid. Also, if you are
notified by the IRS that the nonresident
alien’s eligibility for the exemption from
withholding is in doubt or that the
nonresident alien is not eligible for
exemption from withholding, you must
begin withholding immediately. See
Regulations section 1.1441-4(b)(2)(iii) for
examples illustrating these rules.
If you submit an incorrect Form 8233,
you will be notified by the IRS that the
form submitted is not acceptable and that
you must begin withholding immediately.
Examples of incorrect Forms 8233
include:

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• Any Form 8233 that claims a tax treaty

benefit that does not exist or is obviously
false.
• Any Form 8233 that has not been
completed in sufficient detail to allow
determination of the correctness of the
tax treaty benefit or exemption claimed.

Signature
You or your authorized agent must sign
and date Form 8233. See Regulations
section 1.1441-7(c) for information about
authorized agents.
Paperwork Reduction Act Notice. We
ask for the information on this form to
carry out the Internal Revenue laws of the
United States. If you want to receive
exemption from withholding on
compensation for independent (and
certain dependent) personal services, you
are required to give us the information.
We need it to ensure that you are
complying with these laws and to allow us
to figure and collect the right amount of
tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records relating
to a form or its instructions must be
retained as long as their contents may
become material in the administration of
any Internal Revenue law. Generally, tax
returns and return information are
confidential, as required by section 6103.
The time needed to complete and file
this form will vary depending on individual
circumstances. The estimated average
time is: Recordkeeping, 1 hr. 5 min.;
Learning about the law or the form, 31
min.; Preparing and sending the form
to IRS, 57 min.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler,
we would be happy to hear from you. You
can write to the Internal Revenue Service,
Tax Products Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111 Constitution
Ave. NW, IR-6406, Washington, DC
20224. Do not send the tax form to this
address. Instead, give it to your
withholding agent.