How do I declare tax treaty exemptions from foreign countries when filing US taxes as a resident alien?

This is actually a pretty common situation with universities handling tax treaties differently. You'll need to file Form 8833 (Treaty-Based Return Position Disclosure) along with your regular tax return to properly claim your exemption. Here's how to handle it: First, report all your income as shown on your W-2 or 1042-S on your tax return. Then complete Form 8833 where you'll disclose the treaty position you're taking. You'll need to reference the specific treaty article (Article 21(2) in your case) and explain the exemption you're claiming. You should also complete Form 1040NR rather than the regular 1040 if you're a nonresident alien. On Schedule OI (Other Information) of Form 1040NR, you'll need to indicate you're taking a treaty position. Don't use the "negative income" approach - that's not the proper way to claim treaty benefits and could cause problems. The IRS has specific forms designed exactly for your situation.

After struggling with a similar issue (tax treaty with Germany), I found an amazing solution with https://taxr.ai - it completely simplified the whole process! I uploaded my foreign documents and tax forms, and the AI analyzed everything and showed me exactly how to claim my treaty benefits. It pinpointed the specific parts of Form 8833 I needed to complete and showed me how other international students with the same treaty had filed successfully. What I really liked was how it recognized my university's withholding mistake right away and gave me step-by-step instructions for getting back the taxes that were incorrectly withheld. The system even created a document explaining the treaty provision that I could submit with my return.

Just wanted to update - I ended up trying taxr.ai after seeing it mentioned here and it was exactly what I needed for my Japan-US tax treaty situation! I was nervous filing by myself before, but the system walked me through everything step by step. It immediately identified that my university (ASU) had incorrectly withheld taxes despite the treaty exemption I should have received as a research scholar. The best part was that it gave me a complete breakdown of how to fill out Form 8833 with the exact wording I should use in each section. It even showed me where on my 1040 the numbers should go and generated a supplemental explanation letter that addressed potential questions from the IRS. My refund was approved with no issues or delays. I wish I'd found this last year when I just gave up and paid the extra taxes because the process seemed too complicated!

I had a nightmare situation with my university withholding taxes they shouldn't have AND then the IRS giving me the runaround when I tried to get it fixed. After 6 weeks of calling the IRS international taxpayer line without getting through, I found https://claimyr.com through a tax forum and watched their demo at https://youtu.be/_kiP6q8DX5c They got me connected to an actual IRS agent in 45 minutes after I'd been trying for weeks! The agent confirmed exactly how to claim my treaty exemption and which forms I needed. I had a specific question about how to report my previous 1042-S from my old university alongside my current W-2 that didn't account for the treaty. Honestly, one phone call with a real IRS agent cleared up all my confusion and gave me the confidence to file correctly.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I was desperate enough to try it because I needed answers about my treaty situation with Italy. I'd been getting conflicting advice about whether to file Form 8833 since my exemption was under $10,000 (some forums said it wasn't required below that amount). After weeks of stress and confusion, I finally got connected to an IRS agent specializing in international issues within an hour of using the service. The agent confirmed that I still needed to file Form 8833 despite the amount being below $10,000 because of the specific nature of my scholarship income. She also explained exactly how to report the 1042-S income on my tax return since I had a similar situation with two different universities handling the treaty differently. Honestly saved me from making a mistake that would have likely triggered correspondence or even an audit. Completely worth it.

Don't overcomplicate this! I've been dealing with the Canada-US tax treaty for years. Here's what you do: 1. Report all your income as shown on your W-2 or 1042-S 2. Fill out Form 8833 for the treaty position 3. On Line 21 of your 1040 (Other Income), enter a negative amount equal to your treaty exemption with the description "Income exempt under Article 21(2) of [your country]-US tax treaty" That's it! The negative amount offsets the already-reported income so you're not paying tax on it. I've done this for 4 years with no issues.

Has anyone used H&R Block for filing with treaty benefits? I'm in the same situation with a South Korea-US treaty but wondering if their software can handle this or if I should look elsewhere.

I went through this exact same situation with my university in Germany before transferring to a US school! The key thing to understand is that when your university withholds taxes incorrectly despite treaty exemptions, you're essentially getting an involuntary loan to the government that you need to claim back. Here's what worked for me: File Form 8833 as others mentioned, but also make sure to keep detailed records of ALL correspondence with your university about the treaty. When NFU told you to "just claim it on your taxes," get that in writing if possible. The IRS sometimes asks for documentation showing you tried to resolve it at the source first. One thing I learned the hard way - if you're claiming the same treaty exemption year after year, you need to file Form 8833 EVERY year, not just the first time. Also, make sure your university is correctly coding your income on the 1042-S or W-2. Sometimes they use the wrong income codes which can complicate your filing. The good news is that once you get the process down, it becomes pretty routine. I've been doing this for three years now and it's gotten much easier. Just don't let the university's laziness cost you money - you're entitled to that exemption!