Federal Withholding Taxes and Tax Treaties
The University of Washington is a withholding agent for the Internal Revenue Service (IRS) and is required to withhold tax.
All employee wages are taxable unless specifically exempt from tax by a US law or a treaty. Scholarships/fellowships paid to a foreign national from a US source is taxable unless specifically exempt from tax by a US law or a treaty.
- A tax treaty is negotiated between the United States and a foreign country. The purpose is to reduce double taxation on residents of the particular country.
- Tax treaty information is available in the following publications:
Foreign National Employee
- Social Security number is required for wage reporting to the IRS
- Social Security number or ITIN is required to claim tax treaty benefits.
- Reviews IRS Publications and makes an initial tax treaty eligibility assessment
Wage Payments to Employees
- Eligible for wage tax treaty
- Completes IRS Form 8233 and the tax treaty article.
- IRS Forms 8233 must be renewed each calendar year
- Current list wage tax treaties available in IRS Publication 901, Carefully read chart for required criteria specified in tables and all footnotes.
- Not eligible or not claiming wage tax treaty
Foreign National Scholarship/Fellowship Recipients
- Eligible for Scholarship/Fellowship tax treaty
- Completes IRS Form W-8BEN Beneficial Owner's Certificate of Foreign Status for U.S. Tax Withholding
- IRS Form W-8BEN must be renewed each calendar year
- If receiving both wage and scholarship/fellowship payments then IRS Form 8233 can cover both tax treaties and IRS Form W-8EN is not needed.
- Current list of Scholarship/Fellowship tax treaties available in IRS Publication 901. Carefully read chart for required criteria specified in tables and all footnotes
- Not eligible or not claiming Scholarship/Fellowship tax treaty
- Scholarship/Fellowship payments subject to 14% Federal withholding tax
The Payroll Office will review documents and make a determination of eligibility.
- If Payroll determines that foreign national is eligible:
- A refund will be made for any federal income tax previously withheld during the current calendar year, up to the tax treaty exemption dollar limit.
- Federal income tax will not be taken out of future paychecks until the tax treaty exemption dollar limit is reached.
- If Payroll determines that foreign national is not eligible:
- Payroll takes no action and the foreign individual is not notified directly.
- If the foreign national does not agree, the only recourse is to file a claim with the IRS on their personal tax return.
Failure to supply the required documentation may result in incorrect taxation