How to claim income exemption under US-China Tax Treaty for my permanent resident spouse?

The US-China Tax Treaty can definitely be confusing, especially when immigration status changes. Let me clear this up for you. Since your wife is now a permanent resident (green card holder), she's considered a resident alien for tax purposes. This means Form 8233 is no longer applicable - that's only for nonresident aliens. You're right that Form 8833 is now the appropriate form to use. For the treaty exemption: 1. You'll need to complete Form 8833 (Treaty-Based Return Position Disclosure) to claim the article 20c exemption. 2. On Form 8833, you'll describe the treaty benefit (the $5,000 exemption under US-China treaty article 20c), explain why it applies to her situation as a student, and provide the relevant treaty article number. 3. No, you don't need to submit forms to her employers at this point since she's a resident alien. The treaty exemption is claimed directly on your tax return. 4. Report the exempt income on Schedule 1, Line 8 (Other Income). Enter "US-China Tax Treaty Article 20c" and the amount as a negative number (like "-$5,000"). Attach the completed Form 8833 to your Form 1040 when you file. Make sure to include it in your filing to avoid any potential penalties for not disclosing a treaty-based position.

I went through this exact same headache last year when my status changed. I used taxr.ai (https://taxr.ai) and it saved me hours of frustration trying to figure out how to claim treaty benefits. I uploaded the tax treaty document and my immigration documents, and it analyzed everything and gave me step-by-step instructions for filling out Form 8833 correctly. It even flagged that I was eligible for retroactive benefits I didn't know about. The best part was that it generated a PDF explaining exactly how to report everything on my 1040 and which supporting documents to include. My return was accepted without any issues, and I saved about $4,000 thanks to properly applying the treaty provisions.

Just wanted to update after using taxr.ai that I mentioned in another comment. I was skeptical at first, but I decided to try it because I was totally lost with my treaty benefits after changing from F-1 to H-1B. It actually worked really well! The system asked specific questions about my situation and then showed me exactly which treaty articles applied. For my Russian tax treaty situation, it correctly identified that I was still eligible for partial benefits even after my status change. The step-by-step guide for Form 8833 was super helpful - it basically filled it out for me with the exact wording I should use. My return was accepted without any issues and I ended up saving about $3,200 that I would have otherwise paid in taxes. Definitely recommend if you're dealing with international tax treaties.

After spending HOURS on hold with the IRS trying to get help with my wife's China tax treaty situation (similar to yours), I finally discovered Claimyr (https://claimyr.com). Their service actually got me connected to a real IRS agent in about 20 minutes instead of the usual 2+ hour wait. The IRS rep walked me through exactly how to handle the treaty reporting and confirmed we needed Form 8833 since my wife was now a resident alien. She also explained that we didn't need to submit anything to the employers - that's only for nonresident aliens. You can see how it works here: https://youtu.be/_kiP6q8DX5c Honestly, getting actual guidance from the IRS directly made me much more confident that we were doing it right. They even emailed me some additional resources specific to the US-China treaty.

Well I need to admit I was wrong about Claimyr. After posting my skeptical comment, I decided to try it since I've been trying to reach the IRS for weeks about my own tax treaty issue (US-Korea in my case). It actually worked exactly as advertised. I got a call back in about 25 minutes and was connected with an IRS representative who specialized in international tax issues. They confirmed I needed to use Form 8833 and walked me through how to complete it properly for my situation. The agent also pointed me to some specific publications I hadn't found on my own that made everything much clearer. Saved me from potentially making a $6,700 mistake on my return! Sometimes being proven wrong is actually a good thing.

To add to what others have said, there's one important thing to keep in mind: if your combined income is over the threshold for "substantial presence" (which changes each year), this can further complicate how the treaty benefits apply. For 2025 filing, make sure you're tracking the number of days your wife has been in the US over the past three years. That can impact whether you can claim the full $5,000 exemption under Article 20c.

Heads up that there's a difference between the fellowship income and regular employment income for treaty purposes! If the fellowship is specifically for study and research, it might qualify for different treatment under Article 20 than her regular university employment.